India's democracy makes growth strategy predictable
Wednesday, 30 June 2010, 09:54 Hrs | 2 Comments
"The new Indian economic growth, an eight percent trend, is based on private entrepreneurship, small businesses as much as large companies, on the domestic market as much as in the global market; and on a balance between industry, services and agriculture," Sorman says in his new book, "Economics Does Not Lie: A Defence of Free Markets in a Time of Crisis".
The growth of Chinese markets seems to have hovered until recently at 10-11 percent a year, says Sorman.
But "every country that is moving from an unproductive rural economy to rapid industrialisation attains that average", the economist contends.
Moreover, China has been lucky. "Since the global growth rate has been around five percent since the beginning of the 21st century, Chinese industries have astutely tapped into the heightened worldwide demand," Sorman says.
But who has gained from China's growth rate, the economist asks.
"At the top of the country is a prosperous ruling oligarchy...some of whom have become heads of businesses either through their connections or by taking over businesses that once belonged to the state," Sorman says.
On the other hand, The Indian growth strategy is rooted in democratic institutions that has seen a relatively more even distribution of wealth.
"India's democracy makes the nation's economic strategy more predictable; China's inscrutable tyranny makes its long-term strategy unpredictable," he says.
"Thus the free market in India represents a consensus choice; not something that an enlightened despot imposed from the top," Sorman argues.
The writer, who has authored more than 20 books on international and contemporary affairs, including "The Empire of Lies" and the "Genius of India", defends the free market system in his new book that describes India as "a market revolution".
Recalling that bad economic policies ravaged entire nations in the 20th century, Sorman says the way out of the crisis is to rebuild trust in the free-market society.
The economist observes that "the free market revolution in India - its benefits and problems - are constantly subject to debates." It is difficult "for the westerner to recognise the extent to which free expression is practised among the Indian people and in the media".
But as the free market consolidates itself in the Indian economic mainstream, the question that haunts India is "how long will it take the poorest of the Indian woman to benefit from economic progress", Sorman says.
"When India fought for Independence under Mahatma Gandhi's leadership, they wanted development - not stagnation and poverty in the name of diversity of civilisations," Sorman says.
For Gandhi, "development was good and just only if it raised the standard of living of the poorest".
Will the road to globalisation and the free market carry Indians where Gandhi wanted to take them, the economist asks.
"...To my mind, an alliance between an export-oriented strategy and grassroots development will protect India from a backlash against globalisation. The 2008 slowdown has not brought any attempt to return to the old socialist system," the economist says.
The book has been published by the Delhi-based Full Circle.
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