Diwali blessings to India.

Today is Diwali, our festival of lights. Today is also the day when the Goddess Lakshmi appeared from under the waters and is thus essential for wealth generation in the coming year. Every house in the country will be decorated with little lights and people will buy gold, cooking utensils and purchase expensive items like cars or electronics at this time praying that their wealth collection will continue for the next year. Trouble is that the lights and most electronic goods that we purchase have been made in China. Even pictures and idols of Hindu Gods and Goddesses are manufactured in China. Traders sell Chinese goods because they are much cheaper than those made in India in spite of the fact that they have been transported long distances. China and India have equal numbers of people, about 1.3 billion each. China's GDP is $7.29 trillion while India's is $1.8 trillion. China exports $1.9 trillion worth of goods every year while India exports a paltry $300 billion, even this will not be achieved this year. China has foreign exchange reserves of $3.18 trillion while India has $295 billion. Inflation rate in China is just 1.7% while the Wholesale Price Index in India is 7.81% and the Consumer Price Index is above 10%. China's economy is growing at 7.4% while that of India is growing at 5.5% but may fall to below 5% in the last quarter. China's credit rating is AA- while that of India is BBB-, just one notch above junk and maybe be downgraded to junk next year. By every yardstick China is far ahead of us and yet it is able to make goods so much cheaper than us. The reason is that China has wonderful infrastructure, one of the best in the world, and its labor costs are much less. That is the real mystery. In developed economies wages are very high and so these countries cannot compete on price. Instead countries like the US, Germany and Japan concentrate on research, innovation and making high end products which are not available elsewhere. China is the second richest country in the world and yet its labor costs are much less than ours. Why? Because of extremely high taxes in India. While China has concentrated on improving infrastructure, drawing in investment and expediting manufacturing industries by keeping taxes low here in India the politicians tax everything very highly to collect money to distribute to the poor to win elections. By creating millions of jobs China has been able to draw some 500 million people out of poverty, create a thriving middle class and increase the standard of living by keeping goods cheap. Here the politicians have created a huge underclass who are dependent on handouts to survive. Yet our business fellows keep whining for lower interest rates instead of pressuring for lower taxes. Because they would rather make black money from property speculation than work hard to create wealth. Why are we keeping the Goddess away instead of welcoming her? Poor India.