Lessons from Covid, China

Context: COVID-19 pandemic provides an opportunity to adopt a new economic paradigm that not only strengthens India vis-à-vis China but also makes the economy good for India’s poorer citizens too.

Diverging India-China’s Growth Trajectory

• Per capita income: 
• In 1990:  India was at $368;  China lagging at $318,
• By 2019, China’s per capita income is five times larger than that of India’s.
•  Industrial capacity: 
• In 1990: India was at similar(ahead in some sectors) industrial capacity as China. 
• In 2010: India became dependent on China for the import of major industrial equipment.
• Industrial policy: 
• India, in line with Washington Consensus: reduced barriers to imports without developing its domestic market 
• China, flouting the World Trade Organization’s rules (“stealing” technology, and protecting its domestic industries): became five times as large as India’s between 1990 and 2010.

Way Forward

• Develop a cyclical link between Trade, Foreign, and Industrial Policy: 
• Change Focus of  Economic Development: from the top line to bottom line citizens to create millions of jobs, with better wages, combining industrial development, trade, and diplomatic policies.
• Attract Investors: utilizing the potential size of the Indian market.

• • • Develop the market by increasing the incomes of citizens.
    • Create more jobs in India’s heartland and rural areas, rather than focussing on attracting investments for large factories using automated machines.

• Promote Learning while earning: industries must provide on the job training to its employees.
• Encourage Atmanirbhar Bharat: to reduce the import dependency and avoid colonial like interdependence.