Fortune: China got basics right, India flubs the obvious stuff

"Bad government and inadequate infrastructure" prevented India from matching China's economic growth although both nations started reforms in early 1990s, the 'Fortune' magazine said today.

Slow disinvestment of PSUs, high tax rates and lack of labor reforms also came in the way of India attaining the same pace of growth as its Asian neighbor, the Hong Kong-based magazine said in an article to be published in October 31.

Comparing India and China, it said "China's economic miracle was achieved by getting the basics right... India, by contrast, is the global economy's idiot savant. India flubs the obvious stuff."

The observation comes close on the heels of Finance Minister P Chidambaram admission that China's growth was "furious" while India's growth remained "satisfactory."

Though India and China had the same per capita income in early 1990s and started economic reforms at the same time, Forune said, "Per capita income in China is more than twice what it is in India, and China takes in 12 times as much foreign investment."

The problem with India, Fortune said, is "bad government and an almost willful disregard for the fundamentals of developmental economics."

Fortune appreciated India's rising exports and GDP growth despite jump in global oil prices. Though India's vigorous economy has won the respect from us, it said "the road ahead is still bumpy."

Despite a booming technology sector, growing middle class and sizzling economy, fortune said, "India still faces enormous problems."

"Red tape and corruption discourage foreign investment, as do restrictions on how firms deploy foreign workers," Fortune said.

Portraying a dismal picture of India's infrastructure, it Said, "The national roadway network is in shambles and the power grid even worse."

Moreover, it said one-third of India's population and more than half of women can't read or write.

"India has moved grudgingly to lower tariffs and balked at turning money-losing state-owned enterprises over to the private sector," It said referring slow tax reforms and disinvestment process.

In contrast, China had build good roads, educated women and young girls, loosened labor restrictions and opened up their economy to competition and foreign trade.

Otherwise, Fortune was all praise for India's capability of producing hundreds of thousands of brilliant engineers a year, software houses managing complex data across thousands of miles for the world's most sophisticated clients.

"India has world-class business leaders and, unlike China, solvent banks," it said, adding "Yet, India flubs the obvious stuff."