MADRID, May 3, 2008 (AFP) – India must boost infrastructure spending and reform its labour market as China has done if it wants its economy to grow as fast as that of its Asian neighbour, participants at the Asian Development Bank’s annual meeting in Spain said Saturday. “The Chinese manufacturing success story has a lot to do with a physical infrastructure that is better,” said economist Bibek Debroy, who has studied both economies, of New Delhi-based think tank Centre for Policy Research.
In 2005 Indian spending on infrastructure was equivalent to 5.9 percent of its gross domestic product compared to 14.6 percent for China, according to India’s Infrastructure Development Finance Co. chief executive Rajiv Lall.
But just over half of the funding for China’s infrastructure projects came from state-owned enterprises, a model which he said could not be copied by India, he added.
“China has very peculiar and unorthodox institutional arrangement,” he said.
Debroy said China has also benefited from reforms of its labour market carried out in the mid-1990s which allowed for the greater use of contract workers.
“China has a very flexible labour market, India’s labour market is very rigid,” said Debroy who prepared a study comparing China and India’s labo