Then during my children’s summer holidays in May, I found myself making another trip with my family to Sri Lanka. This time round, after a brief stay in Colombo – a city which has become visibly more prosperous and that much more interesting over the past five years – we ventured further into the countryside.

What I saw in the Sri Lankan villages impressed me enough to delve deeper into understanding why Sri Lanka has delivered so much more for its citizens than India has been able to.

Visually there are four very striking things about this island country and its countryside:

The levels of filth are visibly lower: Neither in the cities nor in the Sri Lankan countryside did I see the sort of squalor and filth that we associate not only with overcrowded Indian cities like Mumbai but also with most parts of northern and eastern India. Not only are large open drains absent in Sri Lanka, urban planning – even in a small town like Galle (population of 1.1mn) – is clearly exercised more tightly than in the vast majority of Indian cities.

Women are much more visible: Having grown up in Delhi, I am used to living in Indian cities where for every ten men on the street, you see two or three women. In Sri Lanka, the men:women ratio is very visibly 50:50.

The quality of housing is much better: I asked an auto rickshaw driver in Galle to take me to his residence. Then I walked around the neighbourhood in amazement because I could see from the series of parked auto rickshaws on the street that their drivers lived in properly built houses (neither flats, nor tenements) with little gardens in the front and with a spacious living room which looked on to narrow but clean streets.

The Chinese are everywhere: In December 2014 Mahinda Rajapaksa was voted out and Maithripala Sirisena became the President in an election which was supposedly influenced by India. Mr. Rajapaksa was supposedly more sympathetic to the Chinese than Mr. Sirisena is. However, the latter’s victory clearly has not deterred the Chinese from continuing to extend their influence in Sri Lanka. The port in Colombo is being built by the Chinese and the port in Hambantota has already been built by the Chinese. The superb highways along the entire Sri Lankan east coast (which did not exist until three years ago) have been built by the Chinese and I could not help but notice that most of the containers in the Colombo’s main container terminal were Chinese.

Thirty years ago both the countries had similar levels of per capita income – around US$300. Now, however Sri Lanka’s per capita income is more than twice India’s – US$3600 vs US$1600. How did Sri Lanka pull away so much from India?

When it comes to GDP growth, India has actually done better than Sri Lanka – over the past 20 years, India’s real GDP has delivered a CAGR of 7% vs 5% for Sri Lanka.

However, Sri Lanka has done a much better job of controlling the denominator of the per capita income ratio. Sri Lanka’s population growth has slowed from 1.6% in the 1970s to 1.4% in 1980s to 1.2% in the 1990s to 0.8% in the noughties.

India’s population growth has also slowed down during the last four decades but the rate of growth of population remained much higher than Sri Lanka’s. India’s population growth slowed down from 2.3% in the 1970s to 2.2% in 1980s to 1.8% in 1990s to 1.5% in the noughties. As result, over the last 30 years, Sri Lanka’s population density which stands at 327 people per square feet has risen at a CAGR of just 1% vs India’s 1.7% (India has 421 people per square feet).

So why has Sri Lanka been able to control its population in a way that India simply has not been able to? Economists believe that there is a direct relationship between women’s literacy rates and the number of children they have.

A study conducted by the Registrar General of India and the East-West Population Institute noted that: “The states in which female literacy rates are high, fertility rates typically are low. In those states that have low fertility rates, child mortality rates are also low.” Not only are overall female literacy rates for India way behind Sri Lanka (we are at 66% vs their 90%) but the situation is especially bad in the northern and western Indian states (literacy rates well below 60%). Interestingly, southern Indian states like Kerala (92%) and Tamil Nadu (74%) have female literacy rates and fertility rates closer to Sri Lanka’s than to northern India’s.

If ever proof was needed that culture plays as big a role in economic outcomes as politics does, this contrast between India and Sri Lanka as well as between different parts of India and Sri Lanka would make an interesting case study.

In the meantime, Indian policymakers and those of us with an interest in public policy would do well to read Amartya Sen’s book, “The Argumentative Indian”, in which he writes, “In my view the imposing tower of misery which today rests on the heart of India has its sole foundation in the absence of education. Caste divisions, religious conflicts, aversion to work, precarious economic conditions – all centre on this single factor”.

- Saurabh Mukherjea

Saurabh Mukherjea is CEO - Institutional Equities, at Ambit Capital and the author of “Gurus of Chaos: Modern India’s Money Masters”.

(dnaindia.com)