Discussion in 'Politics & Society' started by CrYsIs, Nov 20, 2014.
Can India Become the Next China? | The Diplomat
Why must we be another China?
The author meant to say the next manufacturing hub with stellar economic performance.
Till as recently as 8 months back, all these Western pundits had totally written off India and placed it in a "basket case" category. Now they are falling over themselves to bet on India. It's 2006 all over again.
Of course, Modi deserves great credit for changing sentiment and perception so rapidly. But this dramatic U-turn by these so-called "experts" reflects more on them than anyone else. They simply structure their analyses to suit whichever direction the wind is blowing. What use are these so-called "experts"?
Usual pseudo non-sense stuff.
1) Prepare different reports, classify them as set A and set B.
2) Set A reports deal with all negative news and explanation/impact on country's projected growth
3) Set B reports deal with all positive news and explanation/impact on country's projected growth
Now, based on geo-political situation, specific agenda or realpolitik, either release reports from set A or B.
The important thing is that both types of reports should be available at disposal or this con won't work.
This is similar to news channels who ring up "market analysts" with bearish outlook on markets when markets drop and ring up analysts with bullish outlook when markets go up.
As usual blame the messenger instead of reading his message.I have stated earlier on that western media is quite mischievous and snarky while writing about India,but what they say is unfortunately 100% true.
They love to ridicule us but we give them the fodder to do so.For example look at today's paper about an Honor killing incident in Delhi where a DU woman was killed by her family for marrying outside of her caste.Rest assured tomorrow all of International media will cover this pillory our society and culture.
Now coming back to the issue.Yes India was virtually became a basket case because the UPA government simply refused to do any further reforms which was required for accelerating the economic growth.They rather played their classic "vote bank scheme" card to disperse the anger against the government.On the top of that they introduced socialist tax policy like retrospective tax laws and even went on taxing foreign firms for their international transactions.This ensured that all of the foreign companies packed their bags and left India as well as FDI dried up completely.
This resulted in a massive slowdown and growth falling to just 3-4%.
You must understand that the 8% growth seen under UPA 1 government was not because of the government did anything special but because of a phenomena known as base effect,which means when a country is very very poor,it is easy to achieve a high growth rate because they start from scratch. Thats why places like Bihar are seeing 10-11% growth.
When the base effect started fading away,there was a need of further reforms to maintain the momentum, which the UPA government never did resulting in slowdown.
Now under Modi we are seeing a revival because the investor confidence is returning back due to him being a pro business guy and because of his work in Gujrat.If the poverty barons return back in 2019,rest assured that everything will fall back to square 1.
People are investing in India only because of Modi and not because India has something special.India is not a good place to invest or to do business and it is a persistent bottom ranker in economic freedom index as well as ease of doing business and is at par with failed economies like Palestine and Yemen.
CAN India emulate China's economic success:-
I don't think so.
China prioritized manufacturing from the day it started liberalizing where as India began a good 2 decades later after it's liberalization,instead it focused on IT and Service sector which benefited a small minority.China is lucky in the sense that it started all of that when there was no competition and it quickly captured a large market share in manufacturing,however India is not so lucky.
Today the global growth is driven by middle income and lower middle income countries which just like India are trying be become a manufacturing oriented export driven economies.That means India will face huge competition and until and unless India does something magical,it stands no chance of becoming a global hub of manufacturing.
The only thing India has which no one else is huge work force but with poor governance,infrastructure and socio economic conditions,there is a high risk of this strength getting squandered.
@CrYsIs, you have a weird habit of bringing in totally unrelated stuff. What relevance does that DU murder have to the discussion we are having here, about India's future economic prospects and comparison with China?! This Britshit-like behaviour from a patriotic Indian is puzzling, to say the least.
And I happen to disagree with you about your future outlook and forecast for the Indian economy. Our economy has grown at a great pace with very little focus on manufacturing, over the last 15 years. India is unrecognizable today, when compared to the India of the 1990s. Remember that all this has happened with minimal focus on manufacturing.
India's domestic market is so vast, it is equivalent to more that double the size of US and Europe combined, in terms of population. Over the next decade or so, we will see two things: the knick-knacks we import from China in the millions will be replaced by knick-knacks manufactured in India. In addition, while we will continue to compete with China and dozens of middle-income nations in grabbing a share of the export pie, we will definitely get a good chunk of it, even if we do not manage to replicate the dominance that China enjoyed in the last 20 years.
We will eat into China's share of the export market, and we will produce in humungous quantities for our own domestic market too. Apart from this, we will see an infrastructure boom - roads, expressways, railways, power, ports, logistics, warehousing, etc. This infra boom will give further fillip to manufacturing, and will also generate wealth and prosperity, like the Golden Quadrilateral did.
Thirdly, we will see the beginning of high-value manufacturing in India. Just like an elite section (an ever-expanding elite section) of the population contributed to the IT boom in the previous decade, an elite section of the economy will begin dealing with high-value cutting edge technology. Think microprocessors, avionics hardware, sensors, sophisticated weaponry, cutting edge medical equipment, 3-D printing, etc.
We are going to see all this within the next 10 years. Time will tell who is right, but I advise you to lose the pessimism and invest in a sunrise sector of the Indian economy today. Get into a startup, or if you cannot, invest in one. Analytics, Interconnected devices (smart planet), renewables, smartphones or some sunrise sector like that. You have no idea of the kind of boom we are about to witness. It will dwarf the telecom boom of the previous decade, it will dwarf the IT services boom.
Agree with most of it, however I really doubt we can get into high end industries like solid state devices we have no base at all. Hell, we don't produce even basic ICs locally. On our own we don't standa chance and we'll be playing catch-up for a long time. The best we can do is, go for a IT/Services kind of deal where we let other industries outsource their manufacturing to us.
China is vastly over hyped and India is vastly under hyped by the Western media. India's economy has only grown a few percentage points slower than China's and has still been faster than any other major economy.
Keep in mind China started it's economic reforms in 1978, while India started in 1991, that is a 13 year head start for China.
We keep hearing how awesome China is, but just how long ago did China's economy look like India's today? China's economy was the size of India's in 2005 in nominal terms and 2006 in PPP terms. That's JUST 9-10 years.
Keep in mind India has many potential advantages as well. It is more productive when you have no roads and build your first road, then it is when you have a road and build a slightly better larger road.
China's 1 child policy has meant a really small youth population that has allowed it to have really cheap credit as young people aren't taking out as many loans for houses, cars, education etc... This has provided China with great fuel to fund it's economic growth.
But you can't take short cuts without paying costs in the future.
Now I get why some people feel the need to be pessimistic when comparing India-China and that's fine, but don't forget when you compare India vs Rest of the World except China, India has done AMAZING!
-Since the 1970's the US economy has grown 3x, India's has grown 24x in that same period of time. If you compare to pretty much any other major nation you will find India comes out way ahead over the last several decades with the exception of China.
Side note: It's ok for China to be ahead of India, they've worked hard for it, we're not their enemies, it's not a competition. Let them have their moment to shine.
I was giving you a case-point on why western Media loves to target India.
As i said earlier on,this was largely due to base effect where a country starting from scratch initially has a very high growth rate. Further liberalization and reforms were needed to maintain high growth rate which the previous government simply refused to do so resulting in slowdown.
And yes Cities mainly in the south and a few odd in the north are unrecognizable but villages remain the same.
Indeed but you cannot expect to become a world power by only by becoming a domestic consumption based economy.India has to become an export driven economy.
We are seeing infra boom but not on the scale which should be happening and this infrastructure boom is still largely limited to urban areas and industrialized regions of the south and the west.
I understand the patriotism but you are simply just too over optimistic with a lot of future tense in your statements.I want my country to become prosperous and become economically strong but there are fundamental issues which are preventing it from becoming one.
I must say that the Foundation between CHina and INdia is different, if check the data, in 1991,CHina and India nerely had the same GDP,
in 1991,GDP of China 370billion$, 1.16billioan population,per capita 318$;GDP of India 275billion $, 0.844billion population, per capita 325$;
but differenc at
1.Willingï¼ŒChinaï¼Œ from general people to Governmentï¼Œall had strong willing to develop economic and â€œBlack Cat White Cat catches mice is a good catâ€ï¼Œwelcome all types of Investmentï¼ŒWal-Mart has more than 400 surpermarkets in China now and in India still can't open a 50% stake in the supermarket.
2.Labor forceï¼Œin 1991, chinaâ€˜s literacy rate was 80%(and 95% now) while India was below 50%.and Labor structure, female labor of China accord for 45% of total labor, while most Indian female can't go to the job.
You are not referring to the foundation of China and India, what you have mentioned are Economic data from 91 and demographics. As you mentioned, the foundation of China and India, India's foundation is democracy and China is of Communism.
The difference lies in the meaning of the systems. It is very easy to initiate reforms and take decisions in China as there is no public participation in political decisions where in India we can not move an inch without public consensus.
We enjoy freedom in every sphere but in China the freedom is only mean loyalty to CCP. We are very difficult to be convinced, but in China the CCP rules and guidelines are the way of life, just like a computer programme.
We don't want to become another China, as we prefer inclusive growth and freedom. There is no doubt China made a remarkable progress at the cost of it's people but there is enough possibility that China will collapse in the long run if CCP keep ignoring the Chinese citizens and their aspirations.
@Dovah, in the 1990s, one would have been laughed out of the room for daring to suggest that one day, Indians would be writing 60% of the world's software code. No one ever expected it to happen. Similarly, we will initially start with some big industries outsourcing part of their operations to India. Have you heard about GE JFWTC (John F Welch Technology Center) in Bangalore? It does cutting edge scientific research. It poaches Ph.Ds and scientists from the IITs, I.I.Sc, DRDO, etc. and they really do some great work there. Recently GE set up a 3-d printing plant in Chakan, on the outskirts of Pune. The process is already beginning, albeit slowly. It will pick up steam in the coming years.
Watch out for the likes of Honeywell and Motorola setting up manufacturing plants here, on the outskirts of our big cities like Bangalore/Pune/Hyd etc. That is how the process will begin. In 10 years, it will become a tsunami, similar to the IT boom. In 15 years, several senior employees of these organizations will start setting up their hardware/electronics startups, the way it is happening with IT now.
@CrYsIs, there is no question of "patriotism" - I am speaking from observation, experience and measured extrapolation. Personally, I am on the verge of co-founding my own startup in the smartphone/bigdata/analytics space. Planning to start by Feb next year. I don't know whether you are in tune with the market, but there is a veritable startup boom in India. People used to crib and whine in the previous decade, about there being no "innovation" in Indians, and how the IT industry was just giving rise to glorified "code coolies", how Indians have no "risk taking ability", and a hundred other things. Now, there is a deluge of startups. Many may fail, but even a 10% success rate will generate great amount of wealth and confidence in the next 10 years. Inshallah, even I will succeed by riding the wave of the upcoming broadband/smartphone boom and taking the advantage of being an early mover.
I don't agree with all this "fundamental problem" stuff. We had enough "fundamental problems" even in the 1990s, yet we managed the IT boom. The virtuous cycle that it set off, spread its tentacles even in the peri-urban areas. Something similar is going to happen now with other sectors.
Tbh i was skeptical of this guy and his illusory Gujarat model of development and wanted BJP to field someone like Manohar Parrikar (current DM) as the prime ministerial candidate ,but having seem him in action so far all i can say is te so called positive outlook and investor confidence towards renewed and rising India is just because because of this guy .People of India have already started to sympathize with the Gandhi family on their plight , if by any chance UPA ressurges in 2019 then its all but certain that people of India can stop dreaming about catching up with china
The key difference between India and China is that while both have had good top-level leaders in the past 20 years - The Chinese leaders are able to bulldoze their way thru anyone who stood against their will. With Modi - India has its first leader who has a decent electoral mandate, but that does not stop the regional political clowns and parties from thwarting the Center.
China was able to take on the low-tech manufacturing that the West could not afford to do and use that massive export machine to build their ladder to a more advanced economy.
No one was competing with China to make computers, phones, toys, beds, furniture, appliances, etc. Their cost of labor was too high in the West.....so China had large volume export manufacturing all to themselves for almost 30 years with a little competition from South-east Asia....and this is what helped them build their trillion dollar economy.
For India to take a similar leap - they would need to occupy a space that no one seriously can compete in. The only such space that exists is in high-volume consumer manufacturing which the Chinese have to give up slowly since their wages have multiplied in recent years. But India is not really in a position to take that role. Can anyone see India cranking out half-a-million iPhones a day like the Foxconn factories in Shenzhen......even in the next 10 years. You need to have a near perfect supply chain to make that happen. In the next 10 years all those Foxconn factories will have to leave China to other lower cost places, but most of them won't be coming to India.
India will have to compete in the higher end segment of more sophisticated services and products.....this is the space that no one is going give up easily !!
The Chinese too will be facing the exact same problem as India - their next round of growth won't be financed on the back of high volume exports.....they will have to play with the big boys.
But the Chinese have built up their financial cushion and their educational and civil infrastructure, whereas India has no such cushion nor have they developed the infrastructure.
??Friend, why the "China" in you mind is not the country where I live in? CCP is so strong in your mind, why so weak based on my nerely 30 years experience in China
of-course Indians have their share of blunders,but main diff btw Ind-Chi is "one child policy".You prevented 400mn ppl,just imagine if India has a pop of 800mn now
wow no female work in India can u have any source,Chini&pork!s always bring data from ur behind.Any way 30% female work force in India
Look, I admire China, Chinese people and Chinese cuisine. Every Chinese is good as a human being. But come to reality and scrutinize the facts. Suppressing others is the way of life of ccp. Look their foreign relations. Even internally, why so many censorships imposed on Chinese? why there is restriction of free press, websites, speech and the list continues..... Are the Chinese so disloyal or easily carried away or brain washed? definitely no, It is different if you guys are used to it. BTW, it is natural that everyone loves their own country no matter how bad their govt or system is..
I believe that the discussion needs to be - can we (India) be a another USA.
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