September 29, 2005

Asia Times Letters

Indrajit Basu [India discreet, China bold in oil hunt, Sep 29] makes a fair analysis of the ongoing competition (with the possibility of future collaboration) between India and China over acquiring overseas energy assets. In fact, this whole issue underlines the markedly different nature of the ways in which these countries do business. China can offer [US]$2 billion arbitrarily to clinch an oil deal in Angola, while India can only offer $200 million for a particular railway project. Why? This is because spending of public money in India is vigorously scrutinized by a number of committees, subcommittees and panels before being put to the final debate on the discussion floor of the parliament. Even then the funds are usually categorized, and not free-for-all. China, lacking the desired checking mechanism, can do whatever it wants. Yes, in this particular deal, China's brazen attitude triumphed over India's prudent one – but the kitty has to run out some day. Then what? This is by no means a one-off in the political economy of the China-India story. Consider, for example, the $400 billion non-performing assets stacked up in China's banks vis-a-vis an extremely low NPA ratio for India's banks. Again, this is a case of reckless and unchecked loan-giving by the state-owned banks, as directed by the cadres in Beijing. Contrast that with India, where the finance minister has to criticize the banks for not lending bravely enough.

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