“But Khanna and Huang say India is streets ahead of China.
”The speed with which India is catching up is due to its own efficient deployment of capital and China's inefficiency, symbolised by all the money squandered on SOEs (state-owned enterprises). And China's misallocation of resources is likely to become a big drag on the economy in the years ahead.“
Most importantly, the authors say it's wrong to get distracted by the big picture.
”Statistics,“ they argue, ”tell only part of the story — the macro-economic story. At the micro level, things look quite different. There, India displays every bit as much dynamism as China.“
There have been comparisons between India and China before. But this study comes at a time when the Indian economic story is suddenly looking more impressive than it has for years.
It would be rash to say we're on the threshold of a giant economic boom but there are promising signs.
For a start, take a look at the feverish construction around the country. More than 24 million sq ft of office space will be added in the next 36 months.
That's the equivalent of six Nariman Points.
At the same time some 250 malls and multiplexes are going up around the country. About 2.9 million sq ft of retail space is being added in southern cities like Bangalore, Chennai and Hyderabad alone. There's also a housing boom and the government's road building projects are in full swing.
A great deal will depend on software and business process outsourcing industries that will be employing about 2 million people by 2007, according to forecasts. About 80 per cent of the office construction is for the software or BPO industries.
Other industries too are accelerating sharply. More cars are being sold than ever before. Newly listed Maruti has just announced profit growth of 971 per cent. So is India about to take the Great Leap Forward?
It may not be evident when travelling down the country's potholed roads but Khanna and Huang seem to think so.”
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