India's achievements in the 50 years of its independence can only be a matter of tremendous pride. From a nation which didn't have much of industry or agriculture to boast of, it has acquired a well-developed industrial base capable of producing, as the saying goes, everything from a pin to a plane. The agricultural sector is booming and, in fact, looks ready to take on the world in a host of areas, now that the developed world is reducing its subsidies.

More important, unlike our Soviet role-model, we've managed the transformation from a closed to a more open economy with easethe infamous Hindu rate of growth, for example, has doubled to around 7 per cent today.

With scores of foreign portfolio investors queing up to do business here, and well-known foreign brands being produced here, Naipaul's million mutinies are clearly happening. So why the sombre mood on the eve of the 50th year celebrations? The problem is that while we've done well for ourselves, others have done much better and have left us far behind.

Countries that one didn't take that seriously like Indonesia, Thailand, and Malaysia have outpaced us. While Korea saw its real per capita income increase ten times in the last 30 years, Thailand saw a fivefold increase and Malaysia had a fourfold increase. More recent statistics, when India's growth improved, show much the same thing.

While India saw its per capita GNP (in terms of purchasing power parity) increase by 18 per cent in the period 1987-1995, that for Indonesia and Malyasia grew by around 45 per cent, while Thailand's went up by 73 per cent -- China's per capita income increased by 71 per cent.

As a result of this, according to a recent calculation by the IMF, if India is to grow at the rate it did between 1990 and 1995, it will take 154 years to achieve half the income that the advanced economies had in 1995 -- even if the higher growth of the last two years is taken, it will still take 70 years.

By contrast, Indonesia will take 23, Malaysia 8, Thailand 11 and China 16. Surely figures which dampen the enthusiasm for fifty years of achievements.

What is more frightening than the pure numbers themselves, is the fact that the country continues to slip in terms of competitiveness. Thus, according to the World Economic Forum's (WEF) competitiveness report, India is 45th out of a total of 53 countries that have been ranked-Malaysia is 9th, Indonesia 15th and Thailand 18th.

International management consultancy firm IMD Little's analyses shows much the same results, with India ranking poorly at 41st out of 46 nations. If this continues for some more years, we're likely to see even the new-found enthusiasm of foreign investors waning. We recently saw how Hewlett Packard decided to give India the go by while setting up an inkjet manufacturing facility.

Top officials from Siemens have expressed the same concerns about investing in the country-as long as infrastructure remains the way it is and the bureaucracy relatively unreformed, it is difficult to see how growth can proceed beyond a point.

Reams can, and have, be written on why this is happening. Most of them, in varying degrees, will talk of the impact of the apalling infrastructure, the high subsidies regime, the high interest rates, and problems associated with the Government not allowing closure of sick units, relocation or shedding of the labour force.

All valid arguments and subjects of several articles in themseles. Thus, according to a survey conducted for the World Development Report (WDR), 25 per cent of firms in South and South-east Asia said that they spent over 15 per cent of their time just negotiating with Government officials -- while the WDR doesn't give separate figures for individual countries, it's obvious that the figure for India is several times this one.

The comparable figure for OECD countries was a mere ten per cent. Similarly, the fact that 40 per cent of the country's capital investments are in the government or public sector which yields returns of a mere 3 per cent, clearly puts a ceiling to overall investments and growth.

Despite all the hype over the disinvestment commission's reports and the autonomy package for the Navratna PSUs, it's clear that the Government doesn't really mean business either. According to analysis done by the IMF as well as by Prof Jeffrey Sachs for the Asian Development Bank, a large part of the explanation for growth lies in the degree of openess of the economy, the size of government as well as the level of macroeconomic stability.

The IMF's exercise for 110 countries for the decade 1985-95 found, for example, shows that unless a country has all three parameters right, the chances of high growth are poor. Developing countries which had medium or high degrees of success in all three policy areas had a three in five chance of achieving high growth. India's record on all three parameters is poor -- it is not a very open economy with foreign trade accounting for just a fifth of GDP, the fiscal deficit is not quite under control with little happening on the subsidies or PSUs front.

And while the size of Government is low, the crux is really the quality of expenditure. The record here is, at best, mixed with not too many cuts being made in wasteful expenditure like that on subsidies or on loss-making PSUs.

More important, the Government's role is very large in delaying project. In fact, while the WEF study ranks India's government 23rdThailand is 4, Indonesia 5 and Malaysia 6the major problem lies in what the WEF calls the `level of state interference'. India ranks 48th herein terms of `competence of government' it ranks 39th.

Sachs' study of 78 countries found that South Asia's per capita economic growth was, on an average, 2 per cent less than that of East Asia in the past 30 years on account of the fact that their economic policies were not as progressive.

Similarly, the relative openess of East Asian economies helped them grow faster by 1.2 per cent on a per capita basis. Higher government savings boosted growth by another 0.5 per cent. Similar analyses, and results, have been seen while explaining the difference in growth between East Asia and Africa for the period 1964 to 1992.

Sachs, in fact, concludes that India's growth can actually fall if some of the factors he talked of are not tackled. So, for example, if government profligacy continues and imports are not liberalised further, the growth potential would fall dramatically. Clearly, these are the issues that have to be tackled urgently if India wishes to have something to show during its centenary.

The author is the Business Editor of this paper

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.