This is an interesting question always raised by many people around the world and particularly by Indians in common. India and Indians like to be compared its economy with China, whereas Chinese and its government don’t like them to be compared with India. Chinese believe they are far more superior to India and its economy. An attempt is made to know whether it is possible for Indian economy to outpace the Chinese economic growth in this century. Here there should be clear distinguish between the economy as a whole and the growth rate.
Chinese economy is almost three times bigger than Indian economy. China has got nearly 6% of the international trade compared to only 1.2% of India’s share in international trade. All the social indicators like education, infant mortality rate, infrastructure and so on China outpaces India by leaps and bounds. The main difference between the two economies is the productivity. Chinese worker is almost two times more efficient than Indian worker in similar industry. China has got one of the best infrastructures in the developing world compared to broken Indian infrastructure.
With all these material and economic comparisons India is far back compared to China. Along with these sharp socio-economic differences the decision making process in the top government level is very fast and effective in China compared to slow and chaotic decision making in democratic India. Bureaucracy and corruption are prevalent in both the countries but in China it is in occasional cases whereas in India the corruption is so rampant that it is a different institution by itself.
In these prevailing circumstances and economic facts one could very easily come to conclusion that Chinese economy is far better than Indian economy and it is impossible for the Indian economy to overtake the Chinese economy in this century.
There are two important factors that give a chance to India for performing better than China. The first one is the demography. Chinese population have become older and with their one child policy the population growth have stunted thereby reducing the working age people. Whereas India is relatively a young country and its young population can be a big resource for Indian economy to grow. Here again it depends upon on how these young people are utilized effectively and productively for the growth of economy.
The second most important factor is the free entrepreneurial spirit and the information technology skills of the young urban population. This spirit has created a positive energy among the entire country and now there is lot of confidence among the business and common people. This is totally from private enterprises and government has nothing to claim success for it. As said, Chinese growth is government induced growth whereas the Indian growth is private sector based growth.
These two important factors give a chance for India to overtake the Chinese economic growth rate later. May be it can happen in 10 to 20 years provided India government doesn’t hinder with political instability and policy changes. Here it is only the economic growth rate and not the economy as whole. Far Indian economy to overtake the Chinese economy it may take quite more time and not sure about the time. Again there are multiple factors that have to be determined and it is really hard to factor everything for correct forecasting.
The Indian government has to lay a path by creating cordial business climate with low bureaucracy and corruption less administration so that the already energised private sector can avail the situation and help the economy to grow to Chinese level of 10% growth rate. The other two important sectors that the Indian government has to concentrate are the education and infrastructure. It is well known that human skills are the biggest resource for India’s growth, so educational sector have to be made world class and encouraged by the government.
Infrastructure is in pathetic level compared to China. The freeways and the new airports in Chinese cities are better than developed world and India to compare it’s infrastructure with Chinese should feel shameful. India has to harness all its effort in improving the infrastructure to help both the goods and service exports to grow faster.
Focus on the sectors where you have competitive advantage is the best management practice. India has competitive advantage in information technology, pharmaceuticals and research and development. So government has to put more emphasises and resources in these sectors for higher growth its economy. If corrective actions are taken in these sectors and as already discussed reduce the bureaucracy and stop the corruption the private sector with its huge human skills and innovative potentials can create a growth rate that can surpass Chinese growth rate sooner within this decade itself.
No comments:
Post a Comment