Stalled Promise

Tris five years ago, India chose to go down two paths, on both of which it remains. The first path was to move to anew form of economics. This was informally named liberalisation and involved opening India to foreign capital, dismantling the license raj, and ending public sector monopolies.

- Aakar Patel

Thirty five years ago, India chose to go down two paths, on both of which it remains. The first path was to move to anew form of economics. This was informally named liberalisation and involved opening India to foreign capital, dismantling the license raj, and ending public sector monopolies.

Though this was unstated, the goal of liberalisation was to follow the path of Asian nations like Japan, Taiwan and South Korea and industrialise India. Another nation was attempting this at the same time as us, and that is China. On the cusp of liberalisation, whose date we mark as 24 July 1991 (when finance minister Manmohan Singh presented his budget) India and China were at the same stage of economic development. The World Bank says both nations had a per person GDP of $334 in 1991.

It is said China had a bit of a lead because their process of opening up came just after Mao Tse Tung died, a decade or so before India. But China was coming from a very dark place with no private sector at all and a society that was wounded by the cultural revolution, hammered still by such cruelty as the one-child policy. So it is fair to say that in 1991 we were actually even.

What has happened since on this road is a story that can be understood when summarised by decade. By the end of the 1990s, China’s per person GDP was twice India’s.