Indian Economic Development Chapter 10 Comparative Development Experiences Of India And Its Neighbours

Some of the regional and economic grouping are SAARC, European Union, ASEAN, G-8, G-20 etc.

Pakistan has performed better than India in the field of economic growth rate, per capita income, better living standards and consumption levels etc.

The areas where India has surpassed Pakistan are scientific and technological development, exports of software, defence technology, space research, electronics, genetics, telecommunications, education and health etc.

India seems like two separate countries:

Village India : Supported by primitive agriculture.

Urban India : Supported by industrialised areas.

Agriculture accounts for 25% of the gross domestic product and employes almost 70% of the Indian population.

Wheat, Sugarcane. rice, cotton, tobacco, oilseeds, jute, bajra, corn, tec etc. are the crops of India.

The Great Leap Forward (GLF) campaign initiated in 1958 aimed at industrialising the country on a massive scale. People were encouraged to set up industries in their backyards. In rural areas, commune system, people collectively cultivated lands. In 1958, there were 26,000 communes covering almost all the farm population.

Various indicators of human development are Human Development Index, Life expectancy at birth, Adult literacy rate, GDP per capita, People below poverty line, Infant Mortality Rate, Maternal Mortality rate etc.

Full form of SEZ in Special Economic Zone.

Full form of SAARC is South Asian Association for Regional Cooperation.

Urbanisation is the expansion of a metropolitian area namely the proportion of total area.

Worker–population ratio is total number of workers divided by the population. It is expressed in percentage.

National income is the total value of final goods and services produced in a country plus income from abroad.

It is a government or privately established system of measures which ensures material security for the elderly, unabled destitutes, widows and children. It includes pension gratuality, provident fund maternal benefits, health care etc.

1. There is democracy in India, authoritian militarist political power structure in Pakistan and Command economy in China.

India and Pakistan became independent nationals in 1947.

People’s Republic of China was established in 1949.

In 1951.

China anounced its first five year plan in 1953.

China is tenth five year plan period is 2001-2006.

India, China and Pakistan had similar growth rate and per capita income till the 1980s.

GLF compaign was initiated in China 1958.

The GLF initiated in 1958 aimed at industrialising the country on a massive scale.

In the initial phase, reforms were initiated in agriculture, foreign trade and investment sectors.

In later phase, the reforms were initiated in industrial sector, private sector, firms in general and townships and village enterprises.

Dual pricing means fixing the price in two ways (i) farmers and industrial units were required to buy and sell fixed quatities of inputs and outputs on the basis of prices fixed by the government and (ii) the rest were purchased and sold at market prices.

Special Economic Zones were set up in China to attract foreign investors.

There is mixed economy in Pakistan.

Among the three countries India, China and Pakistan, India is the most densely populated country.

Pakistan has the high fertility rate.

The service sector contributed the most to GDP (in Percentage) in 2003.

One of the much talked issues around the world about China is its growth of gross domestic product.

It was 108.7 crores in 2005.

It was 127.

The contribution of agriculture to the total GDP in India and Pakistan is the same -23%

The people depended on agriculture were 60% in India and 49% in Pakistan.

The share of manufacturing activity in the GDP in China in 2003 was 53%.

China started its development plan in 1953.

The Great Leap Forward (GLF) programme.

Both countries have mixed economy.

China.

Pakistan earns foreign exchange mostly in the form of money transferred by Pakistani workers in the Middle East.

China is the biggest country in area.

Pakistan is ahead of India in reducing proportion of people below the poverty line, its performance in education, sanitation and access to water.

Only 50 women die for one lakh births in China.

India and Pakistan are ahead of China in providing improved water resources.

HDI Rank of China in 85 (2003).

10% of population of China lived below poverty line in 2001.

India ranked 127 and Pakistan ranked 135 according to HDI 2003.

oth succeeded in more than doubling the per capita incomes. The incidence of poverty (defined as per day) has also been reduced in both the countries.

1. In terms of fiscal management, the records of both the countries is rather dismal, 2. There is licenseraj in both the countries.

(i) Rice, (ii) Wheat, (iii) Pulse, (iv) Sugar cane, (v) Jawar.

India and Pakistan were forced to introduce structural reforms by international agencies.

In China.

(i) GDP Growth Rate.

(ii) Human Development Index.

HDI ranking of India, China and Pakistan are 128,81 and 136 respectively in the year 2005.

Commune system of farming is a system of collective cultivation.

China started the process of economic reforms in 1978.

India and Pakistan started the process of economic reforms in 1991 and 1998 respectively.

China has succeeded in controlling growth rate of population because it adopted 'One Child Policy' in 1979. The policy was successfully pursued. But in India this type of policy was not adopted.

FDI (Foreign Direct Investment) in China is much larger compared to India and Pakistan. China has succeeded in attracting much greater FDI than India and Pakistan due to following its Special Economic Zones policy. Under this policy, China is offering comprehensive infrastructure facilities to attract FDI.

GLF campaign met with many

problems such as outbreak of drought, conflict with Russia etc. A severe drought caused havoc in China killing about 30 million people. Moreover, Russia withdraw its professionals who had earlier been sent to China to help in industrialisation process, when it had conflicts with China.

By township and village enterprises we mean those enterprises which are owned and operated by local collectives.

In 1980 (1980-1990).

1. India was at bottom.

2. China was at top.

It was about 3.6%.

It is China.

It is the ratio between the number of maternal death due to child bearing and the number of live births.

Following are the various means by which countries are trying to strengthen their own domestic economies:

1. They are forming regional and economic grouping.

2. There is an increasing awareness on the parts of various nations to join hands together and understand the developmental processes pursued by their neighbouring nations at it allows them to better comprehend their own strengths and weaknesses vis-a-vis their neighbours.

3. By trying to understand the neighbouring economies as all major common economic activities in the region have an impact on overall human development in a shared environment.

GLF campaign faced following problems:

1. Senere drought caused havoc in China killing absent 30 million people.

2. When Russia had conflict with China, it withdrew its professionals who had earlier been sent to China to help in the industrialisation process.

Agriculture is the main occupation in Pakistan employing almost 50% of the population. Wheat, rice, cotton, sugarcane and tobacco are the chief crops and cattle and sheeps are raised. The country is self sufficient in food grains. Pakistan's industrial base is able to supply many of the country's need in consumer goods, although production has slowed in recent years. Remittances from Pakistan working abroad constitute the second largest source of foreign exchange.

China introduced reforms in 1978 in phases. In the initial phase, reforms were initiated in agriculture, foreign trade, and investment sectors. In the later phase, reforms were initiated in the industrial sector. Private sector firms, in general, and townships and village enterprises in particular, were allowed to produce goods. At this stage, enterprises owned by government were made to face competition.

Pakistan and India have followed the mixed economy model with co-existence of public and private sectors. The introduction of green revolution led to mechanisation and increase in public investment in infrastructure in selectareas, which finally led to rise in the production of food grains & agriculture is the mainstay of both the countries. They have atmost equal per capital income & both home succeeded in ??? their per capita income.

Yes, China's rapid industrial growth can be traced back to its reforms in 1978 because reforms in agriculture and establishment of infrastructure in the areas of education and health, land reforms etc. had been taking place with the introduction of 'Great Proletarian Cultural Revolutionary' Mao during the year (1966-67) China introduced reforms in phases after 1978. In the initial phase, reforms were initiated in agriculture, foreign trade and investment sectors. In the later phase, reforms were initiated in the industrial sector. Private sector firms and township and village enterprises were allowed to produce goods. The reforms process also involve dual pricing.

The service sector is emerging as a major player of development in Pakistan. It contributes more to GDP and at the same time emerges as a prospective employer. Pakistan has been able to reduce the proportion of people below the poverty line and also its performance in education, sanitation and access to water is better. Pakistan has also provided improved water sources as compared to China. The Pakistan economy has been witnessing GDP growth at about 8 percent for three consecutive years. All the three sectors, agriculture, manufacturing and service have contributed to this trend.

One child norm introduced in China in the late 1970s as the major reason for low population growth. This measure led to decline in the sex ratio i.e. the proportion of females per 1000 males. For instance, after a few decades, in China, there will be more elderly people in proportion to young people. This will force China to take steps to provide social security measures with fewer workers.

The salient demographic indicators of China, Pakistan and India are (i) estimated population, (ii) annual growth of population, (iii) density, (iv) sex ratio, (v) fertility rate, (vi) urbanisation.

China has the second largest GDP of $7.2 trillion whereas India's GDP is $ 3.3 trillion.

In China the manufacturing contributes the highest to GDP at 53 percent where as in India, it is the service sector which contributes the highest i.e. it accounts for more than 50 percent of GDP.

In dealing with or making judgements on questions with human development indicators. We need another indicator called 'liberty indicators'. Some examples of liberty indicator are the extant of democratic participation in social and political decision making, the extent of constitutional protection of the independence of the judiciary and the Rule of Law etc.

The various factors that led to the rapid growth in economic development in China are : (i) The establishment of intrastructure in the areas of education and health, (ii) land reforms, (iii) long existence of small enterprises and (iv) decentralised planning. These had helped positively in improving the social and income indicators in the post reform period. In agriculture, by handling over plots of land to individuals for cultivation, has brought property to a vast number of poor people. It created conditions for the subsequent phenomenal growth in rural industries and built up a strong base for more reforms.

Economies of India : High density of population, Growth due to service sector.

Economies of China : One child norm, low fertility rate, High degree of urbanisation, Large population growth due to manufacturing sector.

Economies of Pakistan : Very high fertility rate, mixed economy.

(a) Inflation Rate : 4.8%.

(b) Agriculture : It is main stay of Pakistan’s economy.

(c) Per capita : Income $ 2,200

(d) GDP/ PPP = $ 347.3 billion in 2004.

1. Inplation Rate : 4.1%

2. GDP Growth Rate : 9.1%

3. GDP/ PPP : 87.2 trillion

4. Per Capita Income : $5,600

Growth of Gross Domestic Product (%) of India China and Pakistan during 1980-2003.

Outline of strategy of development adopted by China : After the establishment of People's Republic of China under one party rule, following steps were taken for the development of China :

1. All the critical sectors of the economy, land and enterprises owned and operated by the individuals were brought under Government control.

2. In 1958, GLF campaign was initiated. Under this campaign people were encouraged to set up household industry in their courtyard.

3. As regards, agriculture, China restored to commune system of production. Under this system land was collectively cultivated.

4. Great Proletarian Cultural Revolution was introduced by Mao. Under this revolution students and professionals were sent to work and learn from countryside.

5. In order to attract foreign investors, special economic zones were set-up.

6. Dual pricing system was introduced as part of reforms.

7. In order to reduce the growth rate of population, one child policy was adopted in 1979 in China.

In following areas Pakistan has topped India:

1. In Pakistan, the proportion of work-force in 1980s was shifting faster to service sector than in India.

2. Pakistan is ahead of India in reducing proportion of people below poverty line.

3. In Pakistan access to water is better than in India.

4. Pakistan is also ahead in expanding its foreign trade.

India is ahead of Pakistan in the following areas:

1. Population growth rate of India is lower than that of Pakistan. It is 1.7% in India as compared to 2.5% in Pakistan.

2. Education indicator of India is ahead of Pakistan.

The reasons for the slow growth and re-emergence of poverty in Pakistan:
(i) Agricultural growth and food supply situation were based not on institutionlised process of technical change but on good harvest.

When there was a good harvest, the economy was in good condition. When it was not, the economic indicators showed stagnation on negative trends.

(ii) In Pakistan most foreign exchanges earnings come from remittances from Pakistan workers working in the middle east and the exports of highly valatile agricultural products : there was also growing dependence on foreign loans on the one hand and increasing difficulty in paying back the loans on the other.

Table

The growth of agriculture sector, which employes largest proportion of workforce in two countries, has declined. In industrial sector China has maintained double digit number rate whereas for India growth rate has declines. In the case of service sector, India has been able to raise its rate of growth in the 1990s while China reduced their service sector growth.

Table

From the above table we can see that China is moving ahead of India and Pakistan. This is true for many indicators - income indicator such as GDP per capita, health indicator such as mortality rate, literacy, life expectancy in China for one lakh births, only 50 women die whereas in India and Pakistan more than 500 women die.

From the above table we can see that China is moving ahead of India and Pakistan. This is true for many indicators - income indicator such as GDP per capita, health indicator such as mortality rate, literacy, life expectancy in China for one lakh births, only 50 women die whereas in India and Pakistan more than 500 women die.

Factors responsible for accelerated growth in China:

1. Government control : People’s Republic of China was established in 1949 under one party rule. All the critical sectors of the economy, land and enterprises owned and operated by individuals were brought under government control. There was monopoly of government. The government of China undertook many measures to develop the country.

2. Great Leap Forward (GLF) : This campaign was initiated in 1959 to industrialise the country on a massive scale. People were encouraged to set up industries in their backyards. Communes were started in rural areas. Under commune system, land was collectively cultivated. In 1958, there were 26,000 communes covering almost all farmers.

3. Great Proletarian Cultural Revolution (1966-76) : In 1965, Mao introduced the Great Proletarian Cultural Revolution. Under this revolution, students and professionals were sent to work and learn from the countryside.

4. Economic Reforms in 1978 : China introduced many economic reforms in 1978. These reforms resulted in fast economic growth. These reforms were introduced in phases.

In the initial phase, reforms were initiated in agriculture, foreign trade and investment sector. In agriculture, commune lands were divided in to small plots which were allocated to individual households for use and not for

ownership. They were allowed to keep all income from the land after paying stipulated taxes.

In the later phase, reforms were initiated in the industrial sector. Private sector firms, in general and township and village enterprises i.e. those enterprises which were owned and operated by local authorities, in particular, were allowed to produce good.

At this stage, enterprises owned by the government were made to face competition.

The reform process also involved dual pricing.

Indicators showing that China is moving ahead of India and Pakistan:

1. Value of Human Development Index:

The value of Human Development Index in China is 0.755, whereas in India it is 0.602 and in Pakistan it is 0.527. The rate of Human Development shown that China occupies 81 rank, whereas India and Pakistan rank 128 and 136 respectively as regards human development.

2. Life expectancy : Life expectancy at birth is highest in China. It is 71.6 in China, whereas in India and Pakistan it is 64 years.

3. Growth of GDP (%) : China’s growth of GDP was 9.7% in 1990-2002 whereas it was 5.8 and 3.6 of India and Pakistan respectively during that period.

4. Infant and maternal mortality rate : China has the least infant and maternal mortality rate at 30 and 50 respectively, whereas infant mortality rate in India and Pakistan is 63 and 81 per thousand.

5. GDP : China has the second largest GDP (PPP) of $7.2 trillion whereas India’s GDP (PPP) is $3.3 trillion and Pakistan's GDP is roughly about 10% of India's GDP.

6. Under-nourished population : Undernourished population is the least in China at only 11% of the total population, whereas India and Pakistan have almost the same i.e. 21% and 20% respectively.

China

Pakistan

Pakistan

China

Low sex ratio points to social backwardness.

(i) Preference for a son. (ii) Female foeticide.

Higher value of HDI points to a higher level of growth and development of a country.

Higher value of HDI points to a higher level of growth and development of a country.

(i) A check on population growth (Due to one child norms).

(ii) Sustained rise in GDP.

The service or tertiary sector.

Manufacturing (Industry).

Dual pricing means fixing the prices in two ways. In China farmers and industrial units were required to buy and sell fixed quantities of inputs and outputs on the basis of prices fixed by the government and rest were purchased and sold at market prices.

In order to attract foreign investors, special economic zones were set-up.

After a few decades in China, there will be more elderly people in proportion to young people.

The fertility rate is low in China and very high in Pakistan.

China

Common success story of India and Pakistan : Following points indicate the common success story of India and Pakistan :

1. Doubling per capita income : Both India and Pakistan have succeeded in more than doubling their per capita income.

2. Reduction in the incidence of absolute poverty : In both the countries the incidence of absolute poverty has also been reduced significantly.

3. Self sufficiency in food production : Food production has successfully kept pace with the rise in population. Leaving aside annual fluctuation due to weather conditions, both countries are sufficient in food.

Liberty indicator may be defined as that indicator which indicates social and economic liberty of a man. It should be included in HDI as the HDI are not sufficient. Examples of liberty indicators are as follows:

1. The extent of democratic participation in social and political decision making.

2. The extent of constitutional protection given to rights of citizens.

3. The extent of constitutional protection of the independence of the judiciary and the rule of law.

Sectoral contribution in GDP and employment in India, Pakistan and China in 2003

From the table, we come to know that:

(i) Primary sector is not the principal contributor to GDP in all the three countries.

(ii) Economies of India and Pakistan are now relying more on tertiary sector whereas the economy of China is relying more on secondary sector.

(iii) In terms of employment, the shift from primary to secondary sector and tertiary sectors have not been so significant in India as compared to China and Pakistan.

China has surpassed both India and Pakistan in secondary sector.

Common features of India and Pakistan : Following are common features of India and Pakistan:

1. Relatively slow pace of GDP growth compared with China.

2. Poor performance in HDI ranking.

3. Dismal fiscal management.

4. Political survival of a dominating issue rather than good governance.

A.

One-tenth of China.

B.

China

D.

 India, Pakistan and China

C.

 Agriculture to manufacturing and then to services

C.

2007–2012

B.

1958

C.

Mao

B.

30 million people

A.

1978

B.

Export

D.

Favourable balance of trade