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How India's growth will outpace China's - The Economist

Chinese-Dragon

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OK this is not new news... but I just received my copy of the Economist today and this is the "front-page" story. So let's have a friendly discussion, and no trolling please.

(The headline is taken straight from the cover of the most recent edition of the Economist).

My question: What are the implications of India's growth rate surpassing that of China? Particularly in regards to geopolitics and defence?

Despite all the mess and chaos of India, the country’s business is booming. This will change the world

Sep 30th 2010 | Delhi

AN INDIAN boss gestures from the lofty window of his steel-and-glass office. Ten years ago, says Pramod Bhasin, “you couldn’t even get a cup of coffee around here.” Now the area bristles with office blocks. Gurgaon, near Delhi, has swiftly become a global hub for outsourcing. Its recent rural past is not forgotten, however. Villagers still herd goats along its streets; pigs snuffle in the rubbish.

Mr Bhasin, who heads a firm called Genpact, speaks of outsourcing as a dentist might of flossing. Car firms should concentrate on making better cars, he says; most other tasks should be outsourced. Personnel departments, for example, need a few people to handle employees’ gripes face-to-face, but form-filling and data entry can be handled more efficiently by specialists. “I’ve got 10,000 people doing this,” he says. “They’re good at it.”

Genpact began as an internal unit of General Electric before being spun out, better to serve a wider set of customers, in 2005. It helps other organisations do dull things more quickly and cheaply. For example, by analysing the way American hospitals carried out mundane tasks, such as bed-changing and deciding where to put doctors’ offices, it was able to point out more efficient ways of using people and equipment. As a result, doctors perform 25% more operations each day. Demand is brisk: Mr Bhasin predicts that his sales could grow from $1.2 billion to $10 billion in the next ten years.

Such vast ambitions are no longer unusual in India. Firms now worth $5 billion expect soon to be worth $30 billion, observes Vijay Govindarajan, of the Tuck School of Business at Dartmouth College. The country is in a “global sweet spot”, says Nandan Nilekani, a former software mogul who heads a government project, launched on September 29th, to give every Indian an identity number.

India’s GDP is expected to grow by 8.5% this year, and could grow even faster. Chetan Ahya and Tanvee Gupta of Morgan Stanley, an investment bank, predict that India’s growth will start to outpace China’s within three to five years. China will rumble along at 8% rather than double digits; India will rack up successive years of 9-10%. For the next 20-25 years, India will grow faster than any other large country, they expect. Other long-range forecasters paint a similar picture.

Several factors weigh in India’s favour. The first is demography. Indians are young (see chart 1). “An ageing world needs workers; a young country has workers,” says Mr Nilekani. Previous Asian booms have been powered by a surge in the working-age population. Now it is India’s turn. The proportion of Indians aged under 15 or over 64 has declined from 69% in 1995 to 56% this year, says the UN. India’s working-age population will increase by 136m by 2020; China’s will grow by a mere 23m, says Morgan Stanley (see chart 2).

To be sure, many Indians are poorly educated. There will certainly not be jobs in business-process outsourcing for all. India, unusually for Asia, has not yet made much of a fist of labour-intensive manufacturing for export. But its workforce will stay young and keep growing, and it includes millions of English-speakers.

India’s second advantage is that the economic reforms of the early 1990s have unleashed an explosion of pent-up commercial energy. Tariff ramparts have been torn down (see chart 3). The “licence raj”—a system under which it seemed that a businessman could not pick his teeth without a permit—has been swept aside. Private firms have been forced to compete with the world’s best. Many have discovered that they can. Exports have shot up.

Indian firms are increasingly global and sometimes world-class. Arcelor Mittal, based in Luxembourg, is the world’s largest steel firm. Tata Motors, best known for making cars that cost only $2,000, also owns Jaguar and Land Rover, two luxury brands. Bharti Airtel, a mobile-phone firm with 140m subscribers in India, is rapidly expanding into Africa, too.

China’s growth has been largely state-directed. India’s, by contrast, is driven by 45m entrepreneurs, says Amit Mitra, the secretary-general of the Federation of Indian Chambers of Commerce and Industry, a business lobby. He gushes about the energy of India’s vast informal sector, and its ability to solve problems. Mr Mitra recalls meeting the owner of an informal suit-cutting business who used, as a kind of collateral, the fact that his brother held a government job. The brother went to the same office every day. So the moneylender could always find him, and that made the suit-cutter creditworthy.

Business in India: A bumpier but freer road | The Economist
 
Another article from the same edition:

India's surprising economic miracle
The country’s state may be weak, but its private companies are strong


Sep 30th 2010

A big sporting event, some people believe, tells you something important about the nation that hosts it. Efficient countries build tip-top stadiums and make the shuttle buses run on time. That India cannot seem to do any of these things suggests that it will always be a second-rate power.

Or does it? Despite the headlines, India is doing rather well. Its economy is expected to expand by 8.5% this year. It has a long way to go before it is as rich as China—the Chinese economy is four times bigger—but its growth rate could overtake China’s by 2013, if not before (see article). Some economists think India will grow faster than any other large country over the next 25 years. Rapid growth in a country of 1.2 billion people is exciting, to put it mildly.

People power

There are two reasons why India will soon start to outpace China. One is demography. China’s workforce will shortly start ageing; in a few years’ time, it will start shrinking. That’s because of its one-child policy—an oppressive measure that no Indian government would get away with. Indira Gandhi tried something similar in the 1970s, when she called a state of emergency and introduced a forced-sterilisation programme. There was an uproar of protest. Democracy was restored and coercive population policies were abandoned. India is now blessed with a young and growing workforce. Its dependency ratio—the proportion of children and old people to working-age adults—is one of the best in the world and will remain so for a generation. India’s economy will benefit from this “demographic dividend”, which has powered many of Asia’s economic miracles.

The second reason for optimism is India’s much-derided democracy. The notion that democracy retards development in poor countries has gained currency in recent years. Certainly, it has its disadvantages. Elected governments bow to the demands of selfish factions and interest groups. Even the most urgent decisions are endlessly debated and delayed.

China does not have this problem. When its technocrats decide to dam a river, build a road or move a village, the dam goes up, the road goes down and the village disappears. The displaced villagers may be compensated, but they are not allowed to stand in the way of progress. China’s leaders make rational decisions that balance the needs of all citizens over the long term. This has led to rapid, sustained growth that has lifted hundreds of millions of people out of poverty. Small wonder that authoritarians everywhere cite China as their best excuse not to allow democracy just yet.

No doubt a strong central government would have given India a less chaotic Commonwealth games, but there is more to life than badminton and rhythmic gymnastics. India’s state may be weak, but its private companies are strong. Indian capitalism is driven by millions of entrepreneurs all furiously doing their own thing. Since the early 1990s, when India dismantled the “licence raj” and opened up to foreign trade, Indian business has boomed. The country now boasts legions of thriving small businesses and a fair number of world-class ones whose English-speaking bosses network confidently with the global elite. They are less dependent on state patronage than Chinese firms, and often more innovative: they have pioneered the $2,000 car, the ultra-cheap heart operation and some novel ways to make management more responsive to customers. Ideas flow easily around India, since it lacks China’s culture of secrecy and censorship. That, plus China’s rampant piracy, is why knowledge-based industries such as software love India but shun the Middle Kingdom.

India’s individualistic brand of capitalism may also be more robust than China’s state-directed sort. Chinese firms prosper under wise government, but bad rulers can cause far more damage in China than in India, because their powers are so much greater. If, God forbid, another Mao were to seize the reins, there would be no mechanism for getting rid of him.

That is a problem for the future. For now, India’s problems are painfully visible. The roads are atrocious. Public transport is a disgrace. Many of the country’s dynamic entrepreneurs waste hours each day stuck in traffic. Their firms are hobbled by the costs of building their own infrastructure: backup generators, water-treatment plants and fleets of buses to ferry staff to work. And India’s demographic dividend will not count for much if those new workers are unemployable. India’s literacy rate is rising, thanks in part to a surge in cheap private schools for the poor, but it is still far behind China’s.


Advantage India

The Indian government recognises the need to tackle the infrastructure crisis, and is getting better at persuading private firms to stump up the capital. But the process is slow and infected with corruption. It is hard to measure these things, but many observers think China has done a better job than India of curbing corruption, with its usual brutal methods, such as shooting people.

Given the choice between doing business in China or India, most foreign investors would probably pick China. The market is bigger, the government easier to deal with, and if your supply chain for manufactured goods does not pass through China your shareholders will demand to know why. But as the global economy becomes more knowledge-intensive, India’s advantage will grow. That is something to ponder while stuck in the Delhi traffic.

India's economy: India's surprising economic miracle | The Economist
 

Buddy, no offence, but such posts and threads may be more suitable for your own country india's bharat rakshak forum.

Lest you forget, let me remind you humbly that this forum is Pakistan Defense forum and there main discussion revolves around the security and strategic issues of Pakistan and its friend China....

Hope you get the point.

And yes your india is superpower... happy now?
 
This is good for both India and China. Competition is always better for innovations. It takes time for west but we started believing- next era is Asian era.

I hope China and India should learn from each others achievements and mistakes, keep aside small conflicts and move ahead for better future.

Same with Pakistan, once they are out of Afghanistan and terrorism mess. they should copy Indian system (economical, political, behavioral similarity). I am positive if Pakistan follows it then county will move forward.
 
Buddy, no offence, but such posts and threads may be more suitable for your own country india's bharat rakshak forum.

Lest you forget, let me remind you humbly that this forum is Pakistan Defense forum and there main discussion revolves around the security and strategic issues of Pakistan and its friend China....

Hope you get the point.

Challenger, you aren't Chinese and everyone knows it.

1) You support Japanese war criminals, and you apologize for Japanese war crimes.
2) You repeatedly call us "Chinese Kommunist Dogs".
3) You can't read or speak even a single word of Chinese. Ni zhen shi ge sha zi.

Poor false flag, now let's all get back to the topic. :azn:
 
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Well china has its moments and so will india but like i always maintained it doesnt have to be china vs india /china or india ,but china and india.
As for implications i dont see any in short term atleast but the article only talks about growth rate,in almost every other economic parameter china is way ahead and i dont see a problem if that gap was to decrease.To give u clearer perspective china's per capita gdp[ppp] is $6500 ,indias $3100 compare that with usa's $39,000.That tells u the distance yet to be covered.
 
I am all for co-operative competition..and such articles are not worth a penny..
Lets hope this thread does not turn into another troll fest.
 
Challenger, you aren't Chinese and everyone knows it.

1) You support Japanese war criminals, and you apologize for Japanese war crimes.
2) You repeatedly call us "Chinese Kommunist Dogs".
3) You can't read or speak even a single word of Chinese. Ni zhen shi ge sha gua.

Poor false flag, now let's all get back to the topic. :azn:

Buddy, I used to teach in the school where you are learning your tricks now, please be assured.

It is an extra privilege that this forum since its birth has given to China and the Chinese members that they enjoy in a non Chinese forum.

I hope, authentic Chinese members do not over exploit the privileges or misuse them.
 
Buddy, I used to teach in the school where you are learning your tricks now, please be assured.

It is an extra privilege that this forum since its birth has given to China and the Chinese members that they enjoy in a non Chinese forum.

I hope, authentic Chinese members do not over exploit the privileges or misuse them.

No trolling/derailing, stick to the topic please.

(I would have written that in Chinese, but since you can't read or speak even a single word in Chinese, what would be the point).

As for the point about the forum, this proverb has a very cultural meaning to Chinese people that you won't be able to understand, since you're not Chinese.

cc2e.png
 
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I am all for co-operative competition..and such articles are not worth a penny..
http://www.economist.com/node/17145035
go to the website and read[dragon hasnt posted all of it].It also talks about potential pitfalls wrt india.But again we have seen hundreds of such articles,i guess portraying china and india as competitors spices things a bit for the west.
 
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Buddy, I used to teach in the school where you are learning your tricks now, please be assured.
It is an extra privilege that this forum since its birth has given to China and the Chinese members that they enjoy in a non Chinese forum.

I hope, authentic Chinese members do not over exploit the privileges or misuse them.

This is such a sub continental (specifically Punjabi) verbiage. You just translated it from hindi/urdu to English ;)
 
No trolling/derailing, stick to the topic please.

(I would have written that in Chinese, but since you can't read or speak even a single word in Chinese, what would be the point).

So, is the guy suggesting that you are not a Chinese? Well, I have an interesting observation.

His sentence, "Buddy, I used to teach in the school where you are learning your tricks now" is a very common phrase/saying in Hindi/Urdu. In Hindi/urdu, this saying is "Jis School me tum Padh rahe ho, us school ke hum teacher reh chuke hain", which translates exactly into the phrase which he used. Is there an equivalent/similar proverb/saying in Chinese? If not, he is almost certainly a South Asian. Very likely a Pakistani, since his stance is anti-India generally, he cannot be an Indian.
 
Buddy, no offence, but such posts and threads may be more suitable for your own country india's bharat rakshak forum.

Lest you forget, let me remind you humbly that this forum is Pakistan Defense forum and there main discussion revolves around the security and strategic issues of Pakistan and its friend China....

Hope you get the point.

And yes your india is superpower... happy now?

leave the mask man.everybody knows it.:china::china::rofl::rofl:
 
So, is the guy suggesting that you are not a Chinese? Well, I have an interesting observation.

His sentence, "Buddy, I used to teach in the school where you are learning your tricks now" is a very common phrase/saying in Hindi/Urdu. In Hindi/urdu, this saying is "Jis School me tum Padh rahe ho, us school ke hum teacher reh chuke hain", which translates exactly into the phrase which he used. Is there an equivalent/similar proverb/saying in Chinese? If not, he is almost certainly a South Asian. Very likely a Pakistani, since his stance is anti-India generally, he cannot be an Indian.

All of the Chinese members realised that he wasn't Chinese, when he started apologizing for Japanese war criminals (who killed 20 million of our brothers and sisters), and calling us "Chinese Kommunist Dogs".

You're right, there is no equivalent phrase in Chinese for that sentence you wrote in Hindi/Urdu.

Ask him to tell you what that Chinese proverb I wrote above means, and watch him fall flat on his face because he can't understand a single word.
 
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