Saturday, June 21, 2008

Buoyant government by Chandra

Since some time now more people loud their voice on Indian IITs and IIMs in Higher education and KVs, NVs CBSC etc elite about the buoyant role of government achievements. They don’t understand the difference between these institutions and other specific regional State Government run schools and institutions. The later kills million of students instead to teach them to get employed and grow economy. It is also often get sucked debate on China and India’s economic development.

Here is an interesting yet quite acceptable argument between these two countries despite their diversity. Again it is from Economist Ajay Shah.
“How important is exchange rate policy in explaining the gap between Chinese and Indian growth?
In India today, it is fashionable to suggest that India should do Chinese-style exchange rate policy on the grounds that this will induce Chinese-style growth in India. There are three problems with this proposition. First, there are many important elements of the Chinese growth advantage - the contribution of exchange rate policy is small at best. Second, there is no switch inside the central bank which can be thrown to achieve Chinese-style exchange rate policy. A full reckoning of the cost and complexity of setting up that configuration must be put on the table. Third, Chinese exchange rate policy is breaking down.
It is important for us in India to closely study the Chinese growth miracle. Six critical components of that experience can be identified, which differ from India:
When their economic reforms started, China was near universal literacy, while we are still far from this.
China has sound law and order, in contrast with the banditry that afflicts a third of India.
China has no trade unions, in contrast with the difficulties faced by Indian firms.
China has high quality roads, railways, ports and airports; in all four areas, India is lagging far behind.
China has near-zero tariffs, in contrast with India which is still quite protectionist.
China had a one-child policy, which led to a compression of the demographic transition into a short period.
Before we embark on Chinese-style undervaluation, we need to take in the full costs of this strategy. India is on the path to building sound institutions, in the context of an open democracy and free press, and aspires to become a mature market economy. All the elements of the Chinese strategy are antithetic to this goal”.
Don’t miss reading full article if you do no option to me to energies your muse!

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