a

CIVIL SERVICES TV

  /  Issues and Analysis Series   /  Can India Overtake China?

Can India Overtake China?

The future world will belong to markets, where investment can be directed, where production can take place and who can help life made easy. The future world will be a world where environmental problems are manageable problems, and whose occurrences do not affect the world environment to create unmitigated health problem and its solutions do not drain the economy as well.

India can overtake China if India thinks strategically, having a short term spurt and in sustainable manner.

STRATEGIC STEPS

Economic growth cannot be separated from geopolitics since economic growth is intrinsically related to geopolitics.

Strategically, India seems to be following a policy of countering China, checkmating them on various issues and strategies. But such an approach comes with, several limitations.

The U.S. is a quickly-receding extra-regional power whose long-term commitment to the region is increasingly indeterminate and unsure; India cannot be sure of US support in the region permanently.To think that US China relations will worsen, is a far-fetched thinking. U.S.-China relations are far more complex than is generally known.

India is not in a position to match the powerful Yuan with its Rupee. Yuan is backed by vigorous political support from Beijing. It’s prudent to accept that Rupee doesn’t stand near to Yuan.

India has a $70 billion-strong trading relationship with China. Instead of boycotting Chinese goods or encouraging the ban on Chinese goods, India can use it as a bargaining chip to check Chinese behaviour.

Adopting a straightforward balancing strategy, which is what India seems to be doing with China, may prove to be a costly affair. The best strategy in this case is therefore to outsmart the Chinese.

This can be done.

  1. One is by co-binding China in a bilateral/regional security complex: that is, view China as part of the solution to the region’s challenges (including terrorism, climate change, piracy, infrastructural/developmental needs) than as part of the problem, Some efforts in this direction are already under way such as India-China joint anti-piracy missions in the Gulf of Aden.This security cooperation should most certainly be enhanced in the Indo-Pacific where India should, even while being part of the Quad.
  2. Second, India needs to cooperate with and trust China while at the same time keeping its defence preparedness complete and with all guards, for after all, in the international politics that we are part of, the role of military strength in guaranteeing national security cannot be underestimated.
  3. Third, India’s response to China’s refusal to act against Pakistan-based terrorists needn’t be strait-laced. However, while Beijing is unlikely to make Islamabad politically uncomfortable by public terror-shaming, the more China gets involved in Pakistan, the less it can afford to ignore terrorism within Pakistan.

INDIA’S ADVANTAGE

India has a lot of advantage over China and will be having in the coming days. It need not go China ways.

  1. China’s economy should not be growing in the near future. That is on account of one child norm, reducing demographic dividend, saturated World market, a huge inventory of raw materials and many other
  2. China is a top-down system that failed in most countries but seems to have so far succeeded in China. This system has inherent disadvantages. A top-down coercive system may work for a while, but tends to backfire in the long-run. Coercion and the dictatorship of the conductor can produce good music; but truly great music requires personal freedom for individual players and trust between the conductor and the orchestra. The Chinese top-down system is so all-embracing that it may be impossible to dismantle. Like in so many countries through history, when there is some malfunctioning of such a system, the economy gets short shrift over political power preservation. And, therein lies India’s strength. Thanks to the nation’s early commitment to democracy, openness and free media, it is now in a position to reap the benefits
  3. Democratic with their traditions of freedom, and in particular the anonymous ballot, play an important role in bringing a lot of wrong turns to an end, as happened in the US and in India.
  4. India has a much better potential of becoming a soft power throughout the whole of the world in comparison to China. India has only leveraged this status in Yoga and to some extent in Aayurved. It needs to take it long way.The trust that Indians can gain and leverage will be more long lasting, the films are an extension to such an approach, other than Ayurved and Spiritualism. This will have  a distinct imact on forging relations and converting them into “markets”
  5. In terms of demographic dividend, India will be a country to look for and to use its youthful population. That is the trump card for India if India can educate, skill and value load its youthful population
  6. Thanks to the India’s early commitment to democracy, openness and free media, it is now in a position to reap the benefits. Democratic norms with their traditions of freedom, and in particular the anonymous ballot, play an important role in bringing a lot of wrong turns to an end, as happened in the US and in India.

CHINESE DISADVANTAGES

For the past few decades Chinese government had imposed a strict one child policy. While it had no major repercussions on economy back then, It is showing its impact now as number of people attaining the retirement age (thus exiting the work force) are far more than the number entering the work force. Lesser number of working age people compounded by the increase in the dependent population will lead to a decline in the growth rate of China.

The total population is expected to decline by 2% while the percentage of old (dependent population- not contributing to the GDP) would increase by 164%.

China would face the shortage of workforce by 2030s due to the strict one child policy.

Right now China has 230 million more working age people than India however by 2045 the trend would be opposite.

Some real audacious and reckless construction has led to ghost cities and towns in China. It is expected that the housing bubble of China may burst very soon leading to recession.

China’s economy, begins at higher resource utilization levels. Therefore, it finds difficult to raise GDP growth by using existing technologies. It must innovate, and that isn’t easy given China’s current economic structure where most of its economic sectors are under direct or indirect government control. India’s economic growth begins at a low level of resources utilization. Therefore, it can raise GDP growth by the better employment of excess resources with existing technologies.

PRESENT POSITION

The Indian economy is expected to grow at an annual rate of 7.4% in 2018 and 7.8% in 2019, according to a recently released IMF Economic Outlook. India’s economy is “lifted by strong private consumption as well as fading transitory effects of the currency exchange initiative and implementation of the national goods and services tax,” notes the report. “Over the medium term, growth is expected to gradually rise with continued implementation of structural reforms that raise productivity and incentivize private investment.”

India’s projected 2018-19 growth rates are well above China’s 6.6% and 6.4% over the same period. And things could get even worse for Chinese economic growth over the long-term, due to the continued rise of the country’s nonfinancial debt. “Over the medium term, the economy is projected to continue rebalancing away from investment toward private consumption and from industry to services, but nonfinancial debt is expected to continue rising as a share of GDP, and the accumulation of vulnerabilities clouds the medium-term outlook,” notes the IMF report.

STEPS INDIA NEEDS TO TAKE TO OVERTAKE CHINA

  1. India has an excellent chance of catching up with China if it can increase its labour force participation rate (particularly women), increase the average level of skill and attitude in youthful people, improve the quality of its labour force through special training programmes, reduce impediments to let foreign capital participate in its development process, design policies to cultivate a culture of entrepreneurship, and reduce corruption in bureaucracy.
  2. Going by the spurt in the population of India, It is expected that their working age population would continue to climb till the 2045. India can think of making and creating cheap labour enclaves on the lines of SEZ. These labourers will be cheap and will spread spatially and over wide area who will offer skill and savings in some strategic business ventures in some regions.
  3. Immediately work for the reform of education must take place in a manner to eradicate any anomaly between different type of services for example the corrupt Civil Services that is heavily glamourized and that actually holds the progress of the country. Unless the government actually creates a framework for equality of opportunity there is no way that the youth will be motivated and also they will take up a job that is more suited to their talent, rather than being prompted to imitate a job because one of the jobs has been glamourized and offers many possibilities in comparison to another. That parity must be made to invite talent and motivation for Make in India campaign.
  4. Computeinternalization of costs in trying to solve environmental problems. India will be facing an insurmountable environmental problem and this will spread in every direction with its concommitant effect. Water resource and water availability will be a major issue in the coming days, High rates of deforestation will cause multitude of problems, Rollicking and compulsive urban growth and expansion will compound the problem of air pollution, water pollution, urban heat island effect, and a concomitant spread of related diseases. It is no wisdom that people earn to spend in mitigating double disadvantage-damaging the environment and damaging their health and then spending back into the same. India must try to internalize the cost in order to deal with what will be a major drain in the coming days.
  5. Improve Agricultural efficiency at the cost of productivity. Agricultural efficiency is used to connote the degree to which the land is put to best utilisation. Agricultural efficiency is the combined interplay of a variety of factors including the physical (topography, soil, climate) socio-economic (size of land holding, land ownership, structure and type of farming, market structures) and techno organisational (crop rotation, cropping pattern, irrigation, fertiliser and mechanisation). The combined effect of these factors manifests itself in per hectare productivity as well as volume of productivity in a given area. Agricultural efficiency is defined in terms of surplus of value of output over all costs. It is different from productivity in that productivity is simply output per unit land area. A higher agricultural efficiency entails higher productivity but a higher productivity may not necessarily entail higher efficiency. In creasing Agricultural efficiency is ecologically sound practice that will take care of the health of environment, health of people, prevents diversion of funds to restore the environment that has got degraded.
  6. The future of economy belongs to simplifying economic activities, improving efficiency in services offered by futuristic technologies like Robotics, Artificial Intelligence, Augmented reality, Immersive technology and opening up new frontiers of Biosciences. These technologies are going to work wonders for Chinese economy and India must do some catching up, it will be very difficult for India to have made any mark.
  7. Increase the soft power reach in Africa and SW Asia to look for sustainable markets and diffusion of a theme India is comfortable with along with its movies for opening the market indirectly.

Leave a comment

User registration

You don't have permission to register

Reset Password