Clarity of Developmental Intervention
- China's strength and India's weakness -

Amar Yumnam *

A good friend of mine says I have been completely sold out to China. He says this in the context of my appreciation of China's growing economic strength and India's tottering of late. Whatever the case, I would like to force upon him one more piece on China so that we could share a few more rounds of drink on the debate.

China's Strength: One distinguishing feature of Chinese developmental interventions is the unambiguous pursuit of modifications of policies to suit the country's needs. There is no blind pursuit of economic policies without clear suitability to the domestic needs.

Further, the Chinese do not tolerate cumulative errors of application of policies. If they find that any policy or programme has found wanting and unsuitable, they would not waste any time in abandoning the policy and going for a new one.

It is in this context that China started a complete rethink of her policies on the eve of the 11 Five Year Plan which started two years back.

By 2006 China realized that her efforts at export led growth strategy had been successful in her globalization process and stimulating international demand for her products. But more importantly she realized that the process failed to deliver on two important counts.

First, the larger integration with the global economy was yet to have any impact on the growing regional disparities in development.

Secondly, the poor of the country were not reaping the benefits of globalization and rising global demand for Chinese products. So by the beginning of the Eleventh Plan, they had started looking for ways to address these twin issues of poverty removal and regional balance. They were already thinking of raising domestic demand by raising the income of the poor of the country.

In This Background: It is in this background that the global financial meltdown is now happening. The main problem China faces today is not the kind of problems other countries face, but one of declining global demand for her products.

China has taken the ongoing international financial turmoil as an opportunity to push for her already thought for programmes. In this the sheer size of the foreign exchange reserves of the country has come handy. Instead of looking to markets around the globe, she now plans to raise domestic demand to tide over the any potential adverse effects of the global financial turmoil.

This is the reason why China announced a stimulus package of $586 billion in addition to the relaxation of monetary policy. Now unlike other countries, China specifically aims to utilize this package to boost the relatively backward economies of her northern and western parts.

This would benefit 15 of her provinces. In other words, $586 billion would now be invested in the country to address the problem of regional disparities in development and removal of poverty in her less developed regions. This is a huge amount by any standards.

China's current total estimated population is 1.33 billion as of July 2008. But this is of 33 provinces where most of the population concentrate in the provinces not covered by the recent package. The present investment implies, assuming equal division, a little over $39 billion for each of the provinces covered by the scheme.

The uniqueness of China, for that matter of South Korea as well, is the packaged way they look at development interventions. The new investment would invest on infrastructure, education, health, tourism, and other industrial activities now identified as having potential for development such that at the end of the scheme they would have the regions complete in all respects for sustained development.

The Indian Weakness: The Indian weakness in developmental interventions comes out in multiple forms. The present response of the country to the current financial crisis does not have the kind of dovetailing to developmental interventions of the Chinese.

Secondly, India has never shown the kind of unwavering commitment to removal of poverty and balancing of regional development the Chinese does. Further, Indian policy makers have never seen development in a packaged way, witness the so called industrial incentives for the north-east for instance.

On the other hand, I am afraid, India has yet to resolve the kind of division which was the cause of foreign powers coming to the country centuries back. While the country's supposedly most metropolitan city now becomes subject to the issues of ethnicity in a very crude way, one can very easily imagine what might be undergoing in other parts of the country.

When a film depicting the hurdles and troubles an unemployed youth faces in that city gets ban orders on the grounds of its possible ethnic implications, the very character of India and the concept of Indianness now become casualties of politicking.

While China and the United States of America may do politicking for a holistic national identity, India only practices politicking for exclusion and division.