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Comparison game

T N Ninan

One of the reasons why Indians are now less prone to navel-gazing (and given to admiring what they see) is the growing number of global rankings that are done on a regular basis by a variety of official and private bodies (including the media). All through the years of dirigisme, those at the helm thought and stated that India was sui generis, a unique country with unique problems.

Up to a point, that is true - but then every country is unique. And this can be a wonderfully self-serving argument for explaining away any and all failures - as was indeed done over the years. It would be more meaningful and more challenging, therefore, to stop beating drums about how wonderfully we have done on any of a conveniently selected set of parameters, and check whether others have done better. Indeed, one of the more lasting changes in the Indian mindset, wrought in the post-reform years, has been the growing willingness to accept and indeed welcome international benchmarking.

This last week, McKinsey has ranked India at the bottom of a list of half a dozen emerging economies. Days earlier, the United Nations Development Programme ranked India a lowly 124th out of some 170 countries on the basis of its Human Development Index.

Transparency International, an NGO, ranks India 72nd out of 91 countries on its corruption index. Then there are the annual competitiveness rankings, where too India figures in the bottom quartile.

Some of these rankings were new a decade ago, but have now become well-established and are a useful measure of whether India is doing better than other countries by at least improving its ranking from year to year (the evidence so far is mixed). Of course, the most flattering ranking of all is based on growth: India has been the second fastest growing economy in the world, for two out of the last four or five years, and perhaps among the top half a dozen for the last decade or two.

Politicians and other policy-makers may or may not be spurred to great action by the ego trip of such rankings. But companies have crossed a huge mental barrier by benchmarking costs internationally.

The leading steel companies, for instance, try to be among the lowest quartile among all steel companies when it comes to cost per tonne. Refineries like Reliance are among the most efficient when it comes to processing cost per tonne. Cement and paper companies also benchmark their costs with those in other countries. All this is a huge change from what used to be, and has been brought about by the more open trading environment: no import licences, and lower tariffs.

Companies are also beginning to measure themselves on size: who is in the Global 500, or where do you figure in Asian rankings? Many regional publications now rank chief executives and companies on the basis of who is most respected, for instance. And figuring on these does provide an ego boost, which is an aid to improving performance.

What we have not done as yet is benchmark the Indian economy on a whole series of other, very relevant parameters.

For instance, what is the cost of electricity here, compared to the most efficient producers in the world? What is the unit cost of freight transport? Why are Indian land prices so high, that Indian cities have figured in lists of the world's most expensive places to live? What is the labour cost in any particular item of manufacture (like a car, or a refrigerator) in India, compared to Taiwan or China or South Korea?

More such benchmarking, on a much broader range of parameters, will immediately point to the areas where reform is needed the most. Because, in the final analysis, India is an emerging economy like many others, whose performance has been less than startling these past few decades-and it helps mental attitudes to recognise and be conscious of that fact.

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