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There is often a discussion between India and its neighboring country China about population and sometimes economic development. It has been told in the recent ‘State of the World Population Report 2023’ that By the end of June 2023, India’s population will exceed that of China by about 29 lakhs.
Apart from this, according to a recent research paper by the State Bank of India, India will overtake Germany which is the world’s fourth largest economy by 2027, and Japan as the world’s third largest economy by 2029.
In such a situation, the question arises that the speed at which the Indian economy is moving forward, will it leave behind China’s economy in the coming times, what should India do to compete with China in the field of economy?
There was a time when the Gross Domestic Product (GDP) of India and its neighboring country was almost the same. In the year 1990, the Chinese economy was not much bigger than that of India, but China has increased its pace of development in such a way that today the GDP of this country is 5 times more than that of India and considering China’s progress, investment and economic condition, America has China has been stripped of its developing country status.
There has been a report by Moody’s Investors Service which states that the size of the Indian economy recently crossed $3.5 trillion and the International Monetary Fund (IMF) expects it to cross $3.7 trillion this year. .
Understand in simple language, at present India’s economy is similar to China’s economy in the year 2007. However, according to statistics, even at that time the Chinese economy was comparatively bigger than that of India.
China’s per capita income was $2,694 in 2007, while the IMF expects India’s per capita income to increase from $2,379 in 2022 to $2,601 in 2023.
Why India’s economy is slower than China
Import-Export
Actually the way of development of India and China is completely different. The biggest reason for the growth of China’s GDP is that this country has invested a lot in the field of infrastructure. Along with this, exports have been promoted, due to which there has been a lot of growth in the economy.
Between 2003 and 2011, 40 percent of China’s total GDP came only due to investment. As the Chinese economy progressed between 2012 and 2021, its investment ratio increased even more. While the investment ratio in India has remained around 33 percent on an average even during the high growth phase.
After investment in any country, exports are the second biggest reason for GDP growth. In the year 2022-23, India’s exports of goods and services are to exceed $770 billion, while imports are estimated to be around $890 billion.
Compare this to the Chinese economy of 2007, that year China’s exports had crossed $1.2 trillion, while imports stood at $950 billion.
Labor Force
One of the reasons for China’s GDP growth is the labor force. India and China have more than 40 percent of the total working population of the world. China has worked on improving its human capital by increasing the literacy level. These countries may be able to create enough jobs for a growing labor force, which in turn leads to higher savings, investment and greater growth.
The male labor force is almost equal in both the countries but the female labor force participation is more in China. In the year 2007, the female labor force in China was 66 percent, which decreased to 61 percent by the year 2022. On the other hand, the female labor force in India was only 30 percent in the year 2007 and in 2022 it has come down to 24 percent.
Employment
Lack of employment remains a thorn in the road in India’s development even today. Not many jobs have been created in the manufacturing sector in India in the last few years. Most of the jobs in our country are created in the construction, trade and transport sectors. But the manufacturing sector is much more productive than these sectors. It is twice as productive as the transport sector, 2.5 times more productive than trade, and 3.75 times more productive than manufacturing, according to estimates released by the Economic Survey.
foreign investment
On the one hand, from the year 2019 to the year 2021, the share of foreign investment in India has decreased from 3.4 percent to 2.8 percent in the last two years. On the other hand, if we talk about India’s neighboring country China, the foreign investment of this country has increased from 14.5 percent to 20.3 percent between 2019 and 21.
India needs to focus on FDI policies and liberal investment regimes to increase foreign investment.
Can India be the next China in the coming decade and a half??
In a BBC report, eminent American economist Steve Hanke Johns says in response to this question, ‘India has overtaken China in terms of population but is still far behind in terms of development. India is a country riddled with problems. According to the World Bank, there is a difference of 9 years between the GDP of India and China in the year 2021. While India’s GDP was $3.1 trillion, China’s was $17.7 trillion.
In such a situation, if the Chinese economy is stopped and India’s economy grows at a speed of 7-7.50 percent, then it will take about 25 years for India to cross today’s Chinese economy.
According to a New York Times report, a few years ago Dean Geoffrey of ‘Wharton’ was asked whether India could overtake China’s economy by accelerating economic growth. In response, he had said, ‘Yes it is possible because China will become the first country in history to grow old before getting rich. The country will have a population of less than 1.5 billion in the next 10 years and gradually narrow to around 1.3 billion by mid-century.
In a BBC report, Chinese journalist Sun Xi says, "Being a similar democracy, Western countries prefer India over China in most international affairs and often want to use India to balance China.
China stripped of developing country status
Recently the US Senate approved a new law, according to which China will no longer be given the status of a developing country. After withdrawing the status of a developing country, China now has to withdraw financial assistance from the World Bank and other financial institutions. Loan will not be available easily and at low interest rate.
Actually, being a developing country, China used to get cheap loans easily. But after taking cheap loans, China used to get trapped in its debt trap by giving expensive loans to other poor countries of the world.
Why was the status taken away?
US Senate believes that China’s economy is worth 20 trillion dollars And now this country cannot be given all the facilities which are available to the developing countries. China has invested billions of dollars in many countries of the world.
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