Media started with reports and studies that claimed China as superpower that will surpass even the American supremacy very soon and without any mention of India as a world economic power. Soon the consultants, columnists and economists started mentioning China and India growing as Asian superpower and consumer markets. And now many reports are appearing that are putting India ahead of China in many areas and are predicting that India may go ahead of China.
Nicholas D. Kristof wrote in ‘New York Times’ on January 17, 2006:
“India has a solid financial system, while China’s banking system is a catastrophe. And India is in better shape demographically for long-term growth: China is now rapidly aging, but India’s population will be disproportionately working-age for many decades to come (a factor that strongly correlates with economic growth).
India’s democracy, free press and civil society also provide a measure of political stability. The risks of social and political explosions in India are declining, while in China they may be rising.”
However, he cautions too.
“Yet if democracy is one of India’s strengths, it’s also a weakness. India’s basic problem is that its economic policy-making isn’t nearly as shrewd, pro-growth or farsighted as China’s.
That’s a tragedy: we should all want India to demonstrate that democracy is an advantage. But Indian lawmakers aren’t helping.
In India, it costs 6.6 rupees to transfer 1 rupee’s worth of food to the poor. Only about one million people work in technology, and manufacturing, which could absorb tens of millions of poor rural laborers, trails even Bangladesh. The losers are India’s poor.
The bottom line is that the once-great nation of India is reawakening from several centuries of torpor, and facing less risk of a political cataclysm than China. India is poised to again be a great world power.”
Forbes magazine then reported- ‘While the 40 richest Indians are worth $106 billion, China’s 40 richest add up to only a paltry $26 billion. Last year, the overseas Chinese sent home $21.3 billion but the NRI remittance was $21.7 billion. While China hushes up demonstrations, India’s electoral politics demands that the media should play them up.
But Forbes talks of the major drawbacks of Indian picture. “What we don’t publicise sufficiently is that India lags behind China in almost all the indicators of progress. 88 million Chinese still languish below the poverty line and last year’s $1,162 per capita income was on par with the Philippines. But only 13 per cent of Chinese live on less than $1 a day compared to 30 per cent in India with another 30 per cent struggling along on $2.”
However, there is something more fundamental that India can rejoice. The internal consumption-led structure of the Indian economy is closer to that of the developed economies of the West. “What excites me most about India is the potential for an increasingly powerful internal consumption dynamic-an ingredient sorely missing in most other Asian development models, including China’s,” says Stephen Roach, managing director and chief economist, Morgan Stanley. “Private consumption accounts for 64 per cent of India’s gross domestic product (GDP-the value of all goods and services produced in a country in a year). For Europe the figure is 58 per cent, in Japan it is 55 per cent and in China it’s only 42 per cent. Many economists consider the internal consumption-dependent growth model more sustainable than trade-dependent models because an economy led primarily by domestic consumption is less vulnerable to external disturbances.”
India’s per capita income and consumption levels may be only about half of China’s levels. But with higher growth rate in consumption, the income is bound to grow.
While the experts are talking of a bright future for INDIA, Indians individually and in groups and wherever they are working, must look into increasing the productivity, and must try to be innovative. It can boost our GDP by at least 2%. Many times, we can get great improvement in productivity without much investment that may be one’s constraint.