Learning From China

Context: China’s experience in liberating agri-markets, investing in education and skill development holds important lessons for India.

Comparing India with its neighbours: in terms of per capita income in 2020 - 

• India - $1,960 (in PPP terms, $6,460).
• Pakistan - $1,260 (in PPP terms $5,150).
• Bangladesh - $2,000 (though $5,310 in PPP terms).

China’s achievements: Market oriented policies have led to huge growth in every sector – 

• GDP: By 2020, China’s overall GDP was $14.7 trillion ($24.1 trillion in current PPP terms), competing with the USA at $20.9 trillion. India, however, lags way behind with its overall GDP at $2.7 trillion ($8.9 trillion in PPP terms). 
• The quality of life: It depends on per capita income in PPP terms, with the USA at $63,420, China at $17,190 and India at $6,460. No wonder this is even reflected in China’s rise as a sporting nation. 
  • In the recently concluded Tokyo Olympics, China won the second-highest number of medals — 88 (38 gold) after the USA’s 113 medals (39 gold). India was at the 48th position with a total of 7 medals (1 gold).

Lessons from China’s growth:

• Move towards market-oriented policies: Beginning with agriculture. Economic reforms that included the Household Responsibility System and liberation of agri-markets led to an annual average agri-GDP growth of 7.1 % during 1978-1984.
• Farmers’ real incomes increased by almost 14 % per annum during this period.
• This gave not only political legitimacy to carry out reforms in the non-agriculture sector but also created a huge demand for manufactured products, triggering a manufacturing revolution in towns and villages.
• Economic reforms and implementation: India is yet to grow as a mature democracy, where differences of opinions amongst different political parties are respected. But we have to move fast.
• Even for manufacturing to grow on a sustainable basis, we have to increase the purchasing power of people in rural areas. This has to be done by raising their productivity and not by distributing freebies.
• It requires investments in education, skills, health and physical infrastructure, besides much higher R&D in agriculture, both by the government as well as by the private sector.
• Population control: China adopted the one-child norm from 1979-2015. As a result, its per capita income grew much faster. 
• However, compulsory enforcement of population control measures could boomerang politically. The population control bill drafted by the UP Law Commission has attracted much controversy.
• Poor education, especially that of the girl child, is at the core of this failure.