More than a billion small lamps lit the evening sky and hand-held sparkler fireworks added to the dancing light, while firecrackers boomed almost as if a war was going on. In hundreds of millions of homes, people chanted the sacred mantras and called upon the gods to help good defeat evil, and light overcome darkness.

Indians right across the vast subcontinent, and indeed worldwide last month, celebrated Diwali, the festival of lights, Hinduism’s biggest festival, with fervor. But, perhaps unknown to most devotees of Lakshmi, goddess of wealth, and Ganesh, the elephant god revered as the remover of obstacles, this year had a special — Chinese — flavor.

That is because many of the fairy lights, sparklers, firecrackers and even images of the idols were made in China. China’s participation in Diwali through its exports signals a triumph for international trade, particularly when Sino-Indian political relations are strained.

But Chinese success also points to corresponding Indian failure. It is not a simple matter that Chinese ingenuity and trading skills penetrated the sacred sphere in India, but also that Indian craftsmen, industrialists and traders had business snatched from their own backyard.

Indian Prime Minister Manmohan Singh, up and coming leader Rahul Gandhi and planning chief Montek Singh Ahluwalia need to put their heads together and urgently look at India’s economic shortcomings and to go beyond the conventional economic categories in trying to find remedies.

Visitors to Chandni Chowk, the main thoroughfare of old Delhi — and five centuries ago regarded as the richest street in the world — as well as to other major shopping areas in New Delhi, could easily see that Chinese lights and fireworks had conquered. The Associated Chambers of Commerce and Industry even dubbed this as “Chinese Diwali,” estimating that Chinese sales had leaped by 45 percent.

But there are wider business lessons learned here. Indian shopkeepers praised the Chinese exporters for their competitiveness on price. A string of 100 lights made in China was selling for between 40 and 60 rupees, whereas the Indian versions cost about 100 rupees.

In addition, the Chinese scored on ingenuity and innovation, casting the lights in shapes from fruits to stars, and thus adding new delights, whereas Indian manufacturers remain wedded to tradition.

More surprising was that Chinese manufacturers have also managed to penetrate the market for the production of the images of the gods. Traditionally, these were made of clay by thousands of Indian craftsmen. But increasingly clay is being replaced by plastic and rubber icons, which have the advantage of being unbreakable.

China also produced Lakshmi lampshades, usable as lights and as images of the goddess. Ganesh has always been re-created in a folksy way, including in a cricket-playing reincarnation, but this year careful devotees would have seen images of Lakshmi not only loaded with bling but with an inscrutable oriental face.

This is not just a quirky story about an Indian festival. There are important economic and social issues at stake, along with the important question of India’s battle to pull itself out of poverty and to emulate China as a potential economic superpower.

In terms of the “more-than-damned-lies” called statistics, India is already winning and is chasing China hard. The Organization for Economic Cooperation and Development, the club of rich industrialized nations, recently pointed out that in terms of purchasing power parity, India has already overtaken Japan to become the third biggest economy in the world. But such national and global aggregations fail to measure the immense gaps between and within countries.

Per capita income in Japan, now displaced to the world’s fourth biggest economy, is about $35,000 or 24th in the world in per capita terms; that of India is a mere $3,600, languishing in 125th place in the world. (Depending on the source, Luxembourg or Qatar is the richest country in the world, with about $90,000 per person. Singapore, with income of $60,000 and Hong Kong, about $50,000, are way above most of the developed countries.)

But the Indian figures mask the immense chasm between the rich and the poor. The same issue of the Hindustan Times newspaper that highlighted the Chinese success at Diwali also had a glamorous society page celebrating film stars attending a premiere, with many of the women wearing designer saris and weighed down with glittering jewelry.

The same society page also recorded that “Big B,” as Bollywood superstar Amitabh Bachchan is known, had given a Diwali present of a new red BMW Mini Cooper S car, worth 2.4 million rupees or almost $45,000 to his granddaughter Aaradhya. Aaradhya is just 11 months old.

It is easy to contrast this with the lives of too many ordinary Indians, such as Rekha, a vegetable seller on the bridge over the river Jamuna, who came from Bihar because there was no work there, and who lives in a slum barely surviving on a few rupees a day. Or there is Sunil, a three-wheeler auto rickshaw driver for 25 years with a wicked sense of humor, who cannot upgrade to a taxi because there is a tight club he does not have the money or the connections to break into.

Superficially, India and China share much in common, not least the appalling choking pollution, a miasmic fog hanging over both capitals New Delhi and Beijing, the glittering shopping malls, and growing gaps between rich and poor.

But India lags in myriad ways great and small. The OECD notes that India’s growth has slowed significantly and was only 6.5 percent in the fiscal year to March 2012, “and has continued to weaken more recently. … This slowdown is only partly cyclical and reflects the emergence of energy, infrastructure, human capital and institutional bottlenecks.

“The rapid economic growth in the last two decades has indeed accentuated the demand for energy and natural resources, for transport infrastructure and skills. But supply of these key engines of growth has not been able to keep pace.”

India’s opportunities are held back by social and economic contradictions. About half of all workers are trapped in low agricultural work and cannot escape partly because of their poor educational background and partly because of restrictive labor laws, which handicap both manufacturing industry and workers who cannot break through trade union strangleholds.

For me, after 40 years of visiting and working in India, the saddest thing is the complacency and the refusal of vested interests, from politicians to rich business magnates and trade union leaders, to consider new ways, innovation or ingenuity to which Indians would respond.

Even street beggars are held back by the grip of gang leaders. I watched in central New Delhi as scruffy kids were given their instructions about which intersection to patrol. There was shouting and haggling, but in the end the deliberately raggy and snot-nosed children went to their allocated places. Becoming a slumdog millionaire is a chance in more than a million.

Kevin Rafferty was executive editor of the Indian Express newspaper group.

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