Can India Leapfrog China?

DAVOS, Switzerland — India is trying hard not to be forgotten at the World Economic Forum amid the China-focus. The country has brought the single biggest delegation to Davos and ads for its “Inclusive Growth” slogan could be seen not just in the conference center but on public buses in Davos.

Indian executives here prided themselves on the things that set their country apart from its biggest rival among emerging markets, China: democracy, a reliable legal framework for investors, a widespread command of English, a young population due to overtake China’s by 2030, and of course its famed information technology sector.

But there was also an acute sense of envy of China’s superior infrastructure, Beijing’s capacity to map out long-term economic development unbound by election deadlines and the country’s comparatively high literacy rates, particularly among women.

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Despite a 1.1 billion-strong population, India is facing talent shortages — and not just at the very top. “We’re running out of electricians and plumbers because our education system is not keeping pace,” said Raghuram Rajan of the University of Chicago.

Ingrid Srinath Narasimhan, the secretary general of the nongovernmental organization Civicus, warned that despite the government’s pledges to the contrary, growth in India had not been inclusive. Child malnutrition had barely improved over the past two decades, she said, and caste politics still excluded millions of people from real opportunity. While most children now enrolled in schools, 65 percent drop out and only 12 percent go to college. “If you are in the bottom third, life is universally worse than 20 years ago,” Ms. Srinath Narasimhan said.

With its I.T. sector unable to accommodate hundreds of millions of prospective employees, India is trying to expand its manufacturing sector to absorb more labor.

But at least some here hope that India can skip at least some of China’s factory-of-the-world strategy. “Could you leapfrog manufacturing?” Mr. Rajan asked. “Can education be the passport to a service economy?”

As Indian business leaders mused about the importance of becoming more competitive, one American chief executive felt almost at home, especially after President Barack Obama stressed the same theme in his State of the Union address. “I thought for a moment I was in the United States,” said Harold McGraw, head of the McGraw-Hill Companies.