For much of the Seventies and Eighties, development economists spent a lot of time and energy comparing the economies of India and China, as well as the vastly different experiences of the two countries. In many ways, it was very natural to make this comparison. Both countries were roughly similar in size, and until the beginning of the Seventies, per capita incomes were similar, though greater income disparities and the absence of comprehensive safety nets meant that a significantly larger fraction of the Indian population lived in poverty. Moreover, the two countries embarked on the process of planned development at more or less the same time. The dramatically different political systems lent an added dimension to the debate, for it was inevitable that comparisons between China and India soon involved the wider issue of the relationship between democracy and development.
Unfortunately, the narrower issue of ranking the two countries in terms of the usual yardsticks of development was soon settled. The current stage of reforms in China is usually traced to 1979. Soon after, the Chinese economy began to record unbelievably rapid rates of growth in per-capita incomes — and that too, not once or twice, but year after year. Although India too has surpassed the so-called Hindu rate of growth during the last decade and a half, the vastly superior Chinese performance has meant that their per-capita income is now roughly twice the Indian figure. China has also out-performed India in terms of achievements in the social sector. Life expectancy at birth in China is comparable to that in developed countries, while adult literacy is substantially higher than in India.
Perhaps, that is why not much is written nowadays about the comparative performance of India and China. After all, one-sided contests are not exciting and perhaps not worth commenting on. However, the recent visit of the prime minister, Atal Bihari Vajpayee, has rekindled interest in the bigger issue of whether democracy is inimical to growth. For instance, the London-based The Economist carries a special report on the growth experiences of the two countries, and brings up the question of whether the need to convince large cross-sections of society in a democracy has constrained India’s rate of growth.
Of course, an obvious problem in generalizing from the comparative experiences of just two countries is that neither can claim to be true representatives of their respective groups. For instance, India is huge and heterogeneous; with an extremely unwieldy political structure where decision-making involves aggregating the opinions of more than twenty ruling political parties. The “costs” of democracy must be significantly higher in India than in small countries where political power is shared by a small number of parties. For the record, the only light that rigorous cross-country analyses throw on this issue is that the country specificities do matter. In other words, once “other differences” between countries are taken into account, there is no reason to believe that democracies do better or worse than countries with a more autocratic political structure.
The absence of any firm relationship between democracy and growth is not at all surprising. On the one hand, hard decisions that are likely to antagonize different vote-banks are easier to take in the absence of electoral compulsions. Certainly, successive Indian governments have not been able to embrace economic reforms with anywhere near the degree of fervour that has been witnessed in China. Every finance minister from Manmohan Singh onwards has announced bold measures of change, only to withdraw them in the face of staunch opposition from vested interests.
On the other hand, electoral compulsions should also stimulate improved performance while in office. That is, incumbent governments should strive to impress voters by their superior performance so as to improve their chances of re-election. There is enough evidence that the performance of incumbents does influence voting behaviour. Of course, the incentives provided by the prospects of re-election get diluted when there are a large number of political parties sharing the spoils of office — perhaps this is one reason why coalition governments seem to perform less efficiently than one-party governments. In its extreme form, this also suggests that totalitarian governments may squander public resources for the personal aggrandizement of its rulers — there is only the possibility of mass uprisings to enforce any kind of accountability.
In fact, economists such as Amartya Sen would argue that whether democracy is inimical to growth is perhaps not even a relevant question. This school of thought emphasizes that processes are just as important as the final outcomes — the ends do not justify the means. That is, “freedom” and democracy are important goals in themselves because they enrich human lives, and so measuring development solely in terms of per-capita incomes or even wider concepts, which incorporate criteria such as levels of achievement in health and education are inappropriate. Even the freedom to make wrong choices is valuable.
Perhaps, nothing illustrates the intrinsic value of freedom better than China’s attempts to implement the “one-child per family” policy. In fact, for a long time, both India and China have been trying to curb the rates of growth of population in their countries. In terms of concrete figures, China has been extremely successful in carrying out its attempts to bring down the rate of growth of population, while India’s efforts have met with only limited success. For example, the Indian population in 1980 was 680 million, which was roughly 300 million fewer than in China. By 2001, the difference had narrowed down to about 200 million.
This has been possible because of the draconian policies followed in China in order to achieve the country’s population policy. Families exceeding the one-child quota are deprived of a large number of state benefits — these are benefits which are essential in China. Except for the period when Sanjay Gandhi was in control, the Indian policy has used carrots more than sticks. This has not been very successful, but surely only the bigoted can express a preference for the stick over the carrot in implementing decisions such as family size. Sen and others also emphasize the instrumental importance of democratic institutions such as a free press.
It has now been established that around 30 million Chinese died in the famine which followed the failure of the Great Leap Forward during 1958-61 — the largest recorded famine in history. Nothing resembling human disaster of this magnitude can happen in India because the free press in India would force the government to take appropriate remedial actions.