Saturday, May 23, 2009

Five things India can learn from China - 1. Infrastructure

China’s wonderful infrastructure is an obvious lesson for India to learn. This is a no brainer , but it is so much of a competitive advantage for China, that even though its glaringly obvious, I am covering it as one of the things India must learn from China.

China is an infrastructural marvel. Everything is being built on a scale that will stagger the imagination. Cities, Railways, Airports, Roads, Ports, Power, Water supply – name it and China is building 20 years ahead. That’s the difference with even Europe or North America. China is building for the coming decades. The West is trying to catch up with last year’s requirement. India is trying to catch up with the last century.

Business is “physically” easy to do in China. Factories don’t have to build power plants – there is no market for generator sets here. In offices, the term UPS is unheard of. If you want to ship your container 17 days from now, you can – there is rarely port congestion and delay. In cities, public transport is superb. In Guangzhou, where I live – the metro must surely be one of the best in the world ; even Singapore’s seems dowdy by comparison ! You don’t need to bus your employees to work and they rarely spend more than a hour on the road. I can go on and on – you can get the drift.

In India, everything is physically difficult. Cities have become unlivable. Transport in cities is a nightmare. The less said about power, the better. Exporters can rarely meet shipping commitments. Our airports, even the newly built Bangalore and Hyderabad ones would be ashamed to stand in the company of the second tier cities in China – leave alone Beijing or Shanghai. End result is that this is all a huge “tax" on businesses in India.

It is a myth to say that China can do this because its not a democracy and that this is a cross India has to bear for its political system. I don’t believe it for one moment. Chinese leaders have understood how important building infrastructure is for their country. Indian leaders haven’t. Full stop. In China too, there are protests over land and displacement of people. But the government acts. They act decisively and firmly. They do not allow a minority with a grievance to block everything. Think about this – China is a large and diverse country. There is no way the government can consistently get away with high handedness, unless the majority of the population truly believes that what is being done is for the general good. That’s why they succeed here. They have demonstrated that building infrastructure leads to benefits for a lot of people and inconvenience to some. The benefits therefore win.

When there is a will, it can be done in India too. The Delhi metro is one such example. The telecom infrastructure is another. The best thing India can learn from China is that investment in infrastructure pays. India must stop justifying its woeful infrastructure in the name of democracy.

India’s siren call has to be “Build baby build” (with apologies to Sarah Palin). China has shown that if you build, prosperity will come.