Activity-Group Discussion

Name of the trainer: M.A.V.S.N. Swamy, MBA, MA, PGD !"!#$%&,
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he (hinese Mirac'e: (an )n*ia imitate it+
China is already transforming the economic map of Asia and the World, but it will not be alone in reshaping the Global economic order, since the Indian economy has every potential to match it and will soon be ‘the Coming China.’ hese two countries put together, house nearly two!fifth of the world’s population and are the fastest growing economies in the world. "ome economists opine that India needs to learn from the economic e#pansion of China. $thers feel that India too can provide valuable lessons to China. A comparative analysis of the two countries is inevitable for a better understanding of this topic. %et us first consider points of similarities between the two countries. &oth are developing economies' both are largely agricultural. &oth have very poor farmers despite great strides being made to minimi(e poverty through reforms. )opulation e#plosion, common to both countries invites attendant problems* environmental degradation, unhygienic living conditions, ill!health, starvation, unemployment, regional disparities, overcrowded cities, slums, pollution etc. he need for resources li+e land, water and energy are ever increasing. &esides both countries are facing potentially destabilising e#ternal disputes , China with America over alwan and India with )a+istan over -ashmir. &usiness in both countries has been adversely affected due to increased corruption. )olitical com pulsions in both countries led to economic chaos that necessitated economic reforms. Although there was no dearth of policies for progress and development in these countries, ‘lac+ of political will’ to implement the policies has been responsible for underdeveloped nature of these countries. he two countries, thus, serve as a model for each other and also provide warning regarding matters related to e#ploited economic opportunities bac+ home. While India can draw lessons from China, the Chinese model, as it e#ists today, is not e#emplary, considering its political authoritarianism and, in this respect, China can learn a lot from India. hat India is an open society and China is not, is one of the most glaring differences between the two. When China started with reforms in ./01, it was poorer than India. &ut China did a lot in the realm of education and in providing health care for the poor. Conse2uently, there was an emergence of a good and improved 2uality of human capital. 3et, measured by purchasing power per person, China’s G4) did not overta+e India’s until the early .//5’s. Compared to India, China has more population in the age group of 65 years and above , more of a dependent population than a wor+ing population. "o, China is growing old even before becoming rich. It is ageing faster than any other country in history. &y 7575, it appears that the wor+ing population will shrin+ and there will be more dependents and fewer wor+ers to support them. In this respect, India is a younger

India needs more fiscal discipline and must encourage capital investment. India’s saving rate is only 7= per cent of the G4) compared to China’s =7 per cent. India and China . and 2ualified engineers . it is pro9ected that among the four big emerging economies . this depends on infrastructure. ne#t only to the . India would continue to grow at more than 8 per cent per annum. %ower regulatory barriers and more efficient government spending are very necessary to improve infrastructure in India. and while we can pat ourselves on the bac+ for being a long!term winner as we are a democracy. India needs to build more efficient institutions and an independent 9udiciary. which appears to be a remote possibility. While there is a huge difference between being a Great )ower and a )owerful 4emocracy. China’s infrastructure has grown significantly compared to that of India’s. the most crucial factor and India has an abundance of it to contribute to the global wor+ing!age population in the ne#t few decades. and only =5 per cent of India’s land is irrigated. labour. China cannot e2ual India’s supply of technical wi(ards with fluent <nglish. provided our growth is driven by three factors ." and "ingapore. he youth and their future need special attention. In India. Capital . . must be completed. If India can dramatically industrialise and inflate the domestic economy to create enough 9obs.country with an average of 76 years and a larger wor+ force population. In short. his is a potential asset and by 7585. freight charges at Indian ports are double compared to the worldwide average. India and China are fairly evenly placed. )roductivity . he high rate prohibits employment!generating investment in India. and India catches the spillage. We cannot allow large! scale unemployment to lead us into the dar+ness of despair and ta+e away the rays of hope that shine today. &ut real interest rates are 8.0 per cent in India and = per cent in China. %abour . power resources are very scarce. A frontal attac+ on all issues alone will ensure progress. regulatory environment and good governance. &ra(il. the problem of unemployment can be overcome. once started. o ma+e it worse. per cent compared to China’s . but we would li+e to see the reverse happen. We need to speed up the process of industrialisation and not s+ip it. And yet the Indian miracle is missing China’s cup overflows now. %and reforms.6 per cent. we need to find a way to match freedom and progress without compromising on either of these. 4uring the past few years. India has the highest availability of s+illed labour. the returns on capital invested in Indian Companies is 7. &y and large. :ussia. capital and productivity. ight controls on capital inflows into India has helped China garner five times the ?4I in India@an advantage of A 755 billion over the past five years. which is only 7> per cent of the G4) compared to =5 per cent in China.

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