There may be thousands of articles and books comparing India with China. The only comparison that matches is the number of people both countries have and very little else.
China is three times the area of India with one official language while India has 22 official languages to even begin with. China, if at all has only one religion, Buddhism and India is a country of many religions and forms of worship. China has no religious issues that divert its government and people from economic growth, whereas India has to constantly battle on many fronts. The Chinese government has no opposition to any of its economic, foreign or environmental policies whereas India has many views. China promotes merit in every field whereas India has a caste- based reservation in almost all fields of governance. For the differences as stated above and many more, China has grown three times faster than India.
I had the privilege of receiving the Chinese minister for commerce in 1987-88 when both the countries had around the same level of exports.
China today exports USD 3.4 trillion of merchandise every year whereas India exports around USD 453 billion. Had exports of services been added, India’s total exports would have been USD 759 billion in 2022.
China’s per capita income is around 4 times that of India and measured in PPP terms it is about three times. Economists still argue on which system is better for economic growth, an autocratic or a democratic polity. Jury is out in the open to see, unless one is blind. China and all the SEA countries have grown much faster than India not because of their intrinsic abilities but because they had governments which pursued consistent policies with determination over decades.
Political parties in India, now gearing up for elections, have made promises for freebies galore instead of economic policies that would increase employment. Still the under privileged find it hard to earn a decent living. In the last three years, no doubt the government has pumped in huge amounts in capital expenditure to stimulate the economy. This was in a hope that the private sector too would follow suite. Instead, their reserves are conveniently parked, most probably in banks or in government securities.
The outgo of Rs 10,79,971 crore as interest payments by the government of India in the year 2023-24 is around 40 per cent of the total revenue receipts of Rs 26,32,281 crore. It means that this huge amount is getting transferred to bond holders who are ‘the rich’ of the country, exacerbating the already high degree of inequality. Economists conveniently ignore that this amount is nearly equal to the capital expenditure incurred by the government. If state government budgets are analysed, the story may not be different.
In China too, the local governments and their enterprises borrowed heavily to invest in infrastructure projects. Some of these have been ghosted and are haunting them now. But China has a manufacturing sector that caters to the world with great efficiency. Indian and Chinese soldiers are on eyeball-to-eyeball confrontation but India is merrily increasing its imports from China, year after year, transferring over USD 110 billion as Chinese trade surplus with India. This is around 40 per cent of Chinese expenditure on their armed forces.
Political polarisation that has occurred in the last one decade may in the long run cost India very dearly. Acute obstinacy amongst political parties prevents states and the central government coming together on national policy issues. This must be dealt with, for India to grow faster.
