Page 72 - IMDR EBOOK 20 OCT 2020

"Pandemic and Beyond: Naviga ng the New Normal" E - Book Year 2020

systematically to take forward his reform-regime. It was still an agrarian economy. But in
the decade of 1980s , especially from 7th plan onwards under Premier Deng, the
politburo made an important departure from its earlier dependence on Heavy Industries
( and Defence Equipment Manufacturing) and for the rst time “ an all-round plan for
social and economic development” was created at the start of a new ve year plan.
China`s One Party status and a homogeneous, seamless political geography has been a
great asset to succeed the way they did. Deng`s world vision was transformed in a
planned manner to create strong industrial presence. To site an example, pre-1980 era,
most Chinese households had only Radios / Transistors. In 80s Deng decided that every
Chinese household will have a Television. He went about setting up units to manufacture
components of TV, each and every one of them, as the TVs were to be only Chinese TVs.
Units were to be set up to manufacture every component necessarily on Chinese soil.
They did it. Similarly, some other mechanical and electronic gadgets were manufactured
with “Every Chinese Household” as the potential consumer. Since all these were
government owned companies, cost of capital or return on capital or protability were
not the considerations. Taking this forward, huge electronics set ups were established, a
few with western technology but essentially with Chinese manpower, skills and capital.

This model was replicated in every commodity required by Chinese people. Over a period
of time, this was to lay foundation to the humongous manufacturing entity that China
has become today.
Around this period, India had a Nehruvian mixed economic model, with Socialistic tone.
The state owned public sector was in total control of the infrastructure development and
some major industries were allowed to manufacture other products for consumptions of
people. The complete manufacturing was under a strict regime of licenses and permits
which were controlled by bureaucracy and thus came to be known as the Inspector Raj.
There was no global vision or a vision for betterment of common people though, plenty of
lip service was always provided by political leadership, typically with an eye on elections.

There was little competition within the country to Indian manufactured products and
the imports of almost every nished product was strictly banned, the quality and service
aspects of Indian products were slowly deteriorating.
Most public sector units, barring a few who operated in an oligopolistic scenario, were
proving grossly inefcient and becoming drain on economy. Under socialistic ideology,
government was unwilling to take corrective actions. Consequentially, infrastructure
development suffered.

Rajiv Gandhi and subsequently Narsimha Rao can be credited with sowing seeds of
opening Indian economy and putting India on the path of Globalization. However, the
inherent heterogeneous fabric of the country, with different political ideologies ruling
different parts of country coupled with religious, castiest, linguistic and territorial
conicts consuming governmental energies and time, the economic agenda had to take a
back seat. This democratic structure of the country was proving nightmare for decision
making and important decisions like the tax reforms took 16 years for the Indian
Parliament to pass the relevant bill. Compared to this, Chinese system had no decision
barriers.

One of the important requirements to build infrastructure is land. In China land is not a
private property but a state property. So it does not have to “acquire” land when it sets up
a new project. All the resultant delays, litigations and corruption are avoided. When
China decided to build the Three Gorges Dam on Yangtse river, the decision could be
taken swiftly despite that it displaced 1.2 million people, ooded 13 cities, 120 towns and
1335 villages. According to Grath Friesen (Forbes:3/21/2019), despite incurring an
enormous social and environmental cost, it provided China huge source of clean
electricity to power incalculable number of industrial units and employment for millions
as well as effective ood control of the Yangtse.

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