India’s Real Growth Rate

Jim Erickson in Time Magazine:

IndiasarahtankersleyOfficials and business leaders meeting in New Delhi could not have asked for more auspicious news as they gathered last week for the World Economic Forum’s annual India Economic Summit. While the three-day event was in progress, the Bombay Stock Exchange’s Sensex index hit all-time highs. That milestone was followed by the cheering news that the Indian economy grew at an 8% rate during the quarter ending Sept. 30, underscoring once-moribund India’s claim to being the fastest-growing free-market democracy in the world.

There’s a reason, however, that the boast requires qualifiers. Undemocratic, not-so-free-market China continues to set the economic pace with GDP growth exceeding 9%—a fact that seemed to dampen enthusiasm in New Delhi in the face of otherwise encouraging circumstances. In Asia, “China is clearly the leader of the flock,” conceded India’s Finance Minister Palaniappan Chidambaram. “India is still just part of the flock.” That chronic inferiority complex is rooted in industrial policy envy. China maintains a big advantage over India in sectors such as manufacturing, said Chidambaram, because its central government dictates “with brutal efficiency” such initiatives as the construction of commerce-greasing infrastructure projects.

More here.