Jewel of the Old British Empire -India’s role in our future economic growth?

Commentators of all persuasions give us constant reports, often positive and occasionally dismal, on the economic and political health of China, and incessantly tell us that our future will be determined by the power brokers of Peking. Rarely do they comment on India’s role in our prosperity.

Indeed, they make it clear that if China dumps us as a trading partner, we will be finished as a financially viable nation. This over-emphasis should cause us concern, as our fascination with China is a dangerous one when all the lessons of life tell us never to have too many eggs in one basket.

There are a number of compelling reasons why we should turn our eyes away from China to have a good look at the many opportunities that await us in India. For example, India is the world’s largest democracy, with a similar system of government to ours, and its commerce and industry operate on a basis which is compatible with our experience.

Of particular importance to us is that British Common Law is the basis of India’s legal system, and it has an independent judiciary. Additionally, India’s economy is based on massive internal demand that is dominated by the private sector — a condition that is a favourable base for our trading potential.

The situation in China is the opposite. They have merely a pretence of democracy, while their implementation of government and their style of doing business is poles apart from ours. Chinese law is remote from the concept of Common Law and the judiciary is not independent. State capitalism dominates the China marketplace, and the economy is far more heavily dependent on exports than it is on internal consumption.

Opportunities for an expansion of Indian trade and investment with Australia clearly abound in a number of ways. They have a massive need of new infrastructure, which will take many decades to satisfy, and Australia can build it for them as well as supply the raw materials.

The immensity of the task is shown by the fact that more than 50 per cent of the homes in India are without power or water. We can also partner with them in the expansion of their impressive service industries that many nations, such as the USA, use significantly. There are many other possible avenues for profitable business for those willing to take pragmatic risks, particularly in industries like education and health.

There are also some downsides. The Indian bureaucracy is massive and too many public servants want quiet payments on the side. The Hindu religion has some militant attitudes and the caste system still thrives, even though it is denied. There are a few currency and investment difficulties to be overcome as well, but these are worldwide problems — especially as we know that there are some investors who find Australia to be a difficult place to do business with.

Which leads me to the key point. I reckon that one day, India will become the equal of China in economic power because, in the long term, democracy always creates better economic returns than totalitarianism.

We must make sure that Australia is part of its rise to prosperity and power. Not to do so will be a significant error of judgment on our part and a poor piece of strategic planning.

 

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