India vs China : The Hard Facts !

Posted in Finance Articles, Total Reads: 12566 , Published on 16 February 2011
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Both India and China are one of the fastest growing nations in the world and both of them are among the diverse nations of the world. Their economies are influenced by number of social, political, economic factors.  If we look at the basic facts economy of china is more developed than India.

 

India Vs China

Let us have a look at some hard facts now. The table below states the facts on basic parameters as they are.

India China Data Table

From the above facts, it is clear that china’s economy is better than India’s economy.  Before comparing, we must remember that India was under colonial rule for 190 years during which, British drained all the resources in India. There was no such instance of colonization in China. This has helped China in establishing strong economic model.

China started its liberalization of its economy much before India. China opened its economy in 1980s welcoming foreign direct investment and private investments. India was little late in embracing open market economy and started its liberalization process as late as 1990s.

We have heard for long that India is agrarian economy and we still use traditional methods of farming. Most of our cultivated land depends on monsoon for their water requirements. Even today our economy is much dependent on monsoons.  However, agricultural sector in China is far more developed than that of India. Chinese farmers use modern farming techniques leading to higher crop yield which can be exported.

In case of IT/BPO service, India is way ahead of China. India primarily enjoys advantage over China because English speaking population in India. China struggles with its population’s English speaking ability. But China has woken up to this fact and it is continuously striving to improve its English speaking capabilities.

China has better infrastructure and manpower. China is way ahead in manpower and labor development, water management, health care facilities and services, communication and civic amenities. This has strengthened the Chinese economy making it one of the best in the world. Although India is plagued by problems like poverty, unemployment, lack of civic amenities, it is still trying to compete with China with respect to infrastructure.

Indians are better at company management skills. There are many Indians who are leading the global companies. You will hardly find any Chinese leading any of the global companies. China not doing well at the business front can also be attributed to the fact that most of the companies came to China and manufactured their goods. It was not Chinas exports that drove the economy instead it were the export products of outsiders. Even in the case of mergers and acquisitions China has not managed to do too well. On the other hand Indian companies are rapidly expanding mergers and acquisitions. Some of the recent examples include; Tata Steel's $13.6 Billion Acquisition of Corus, Tata Tea's purchase of a controlling stake in Britain's Tetley for US$407 million, Indian Pharmaceutical giant Ranbaxy's acquisition of Romania's Terapia etc.

Biggest hurdle in India’s growth is corruption and bureaucracy. It’s a tremendous achievement that we are able to grow in spite of high level of corruption in our system. In India, nobody has fear of laws which they think can be easily broken.  Everybody thinks that they can get their way out in some way or the other. Every day we keep on hearing cases like Adarsh society, 2G scam, LIC housing scam, commonwealth games scam. Or where else would you find a driver – drunk or undrunk – who considers it his right to plough into scores of pedestrians or the poor sleeping on the pavements, and the courts letting him go scott-free, or where else would you come across a mass murderer who rules a part of the country despite having sponsored genocide against its own people who belonged to a different religion, or where else would you find murderers, rapists and thieves in its Parliament. For facts, 40% of MLAs in Bihar assembly are from criminal background.

Comparing India and China only because of high growth rates is not the right thing to do. Almost half of our children are undernourished where as its very small fraction in China. India and China have different levels of development and diplomatic influence and putting them in the same bracket is inaccurate as China is way ahead.

Unless we do not get our politics right, we will struggle to keep pace with the Chinese march. Often Chinese have been criticized for their policies but they are still growing. We have to completely revamp our social, political and economical landscape as well as mindset to compete with china otherwise they will reach at a point where it will be difficult for us to catch them.

 

 


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