India and China Economic Conditions
The economic conditions of India and China are among the largest economies in the world. Economic conditions refer to the various economic indicators used to define the state of the economy of a nation such as the GDP, GDP per Capita, Population, poverty headcount and headcount ratio, poverty index, measures of health and Gini index. The differences in size, composition and other qualitative and quantitative factors stand stark contrast when comparing India and China (Barnes, 44)
India has a smaller economy, about a fifth, compared to China. It imports are a fraction of Chinas, as are the exports. India’s economy depends mostly on its internal market with external trade accounting for 20% of the country’s GDP. This is a major difference from China whose large part of the economy is due to international trade. In fact, India’s Balance of Payments (BoP) on its current account has been negative due to ever-increasing import bill and Balance of Payment has been positive due to remittances from non-Indians and increased foreign direct investment.
The darker side to increased growth rate by China is captured by indices of inequality. The current Gini index, a measure of inequality of wealth/income, of India is 36.8, whereas China’s is 46.9, which is very high. However, China has managed to successfully reduce the proportion of population living below the poverty level by 10% while 22% of India’s population is living below the poverty line. Therefore, the size of both the populations is massive and finding the causes of the difference is crucial.
China’s GDP demonstrated an average growth of 10% per year during 1980-2001, which reduced to a range of 7-8% per year during the year 1998-2008. It expanded 8.9% in the third quarter in 2009, fuelled by the growing government economic stimulus package and the growing domestic consumption. The China’s economic growth is over 10% in 2014/15 with the exports making bigger contributions to it (Barnes, 23)
In India, the average annual rate of GDP was low of 4.0 % in 2002-03, and high of 9.2% in 2006-07. The country’s economy has grown by more than 9 % for the past three years. This has reduced poverty by 10%, but with over 60% of India’s population living off agriculture with floods and droughts increasing, poverty reduction is still a major challenge. The India’s economy has grown to 8.4% for the year 2014/2015.
China 10% 46.9 900 million
India 8.4% 36.8 1.1 billion
Both countries encounters infectious diseases and chronic illness associated with ageing societies, although the burden of infectious diseases is much higher in India. In China, there is earlier extensive public provision of education, health and public services to ensure health, nutrition and sanitation of the citizens. In India, the public provision of all the above has been inadequate throughout the period and has deteriorated in per capita since 2000.
Conclusion
Popular opinions suggest that India cannot catch up with China in the near future. China leads in foreign investment, a key contributor to economic growth by a margin of 10 to 1 since the foreign investors see more opportunities and fewer obstacles in China. China dominates in manufacturing and has the market size and the spending power domestically. The constraints on the growth of India’s economy appear to be insufficient investments including FDI and investments in infrastructure (Goldstein et al, 34).
However, changes are being seen in these areas and the economic reforms could strengthen the role of government and combat inefficiency. If the government initiates the reforms and provides the requisite infrastructure to attract investors, the possibility that India catches up with China in terms of economic conditions does not look impossible.
Works Cited
Barnes, Tom. "China–India: Pathways of Economic and Social Development, edited by Delia Davin and Barbara Harriss-White. Oxford: Published for The British Academy by Oxford University Press, 2014. xviii+ 218 pp.£ 50.00 (hardcover)." China Journal 74 (2015).
Goldstein, Andrea, Nicolas Pinaud, and Helmut Reisen. "The rise of China and India." (2006).
