Sunday, January 29, 2023
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As India returns to positive growth, it must think why it can’t remove poverty like China has

India must be concerned about loss of economic momentum, and because it isn’t outpacing countries that are nowhere near China in growth & development.

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Whichever way one looks at it, Xi Jinping’s announcement that China has abolished absolute poverty is an epochal event. From being one of the poorest societies on earth, and accounting, along with India, for the overwhelming bulk of the world’s absolute poor, China has now reached a level of per capita income that is close to the global average (measured using purchasing power parity, or PPP). And it has raised a claimed 850 million people out of poverty.

As with all Chinese statistics, there is some quibble about the numbers. China uses as its benchmark a basic World Bank-prescribed poverty-level income figure meant for poor countries, whereas it should be using a significantly higher number meant for middle-income countries. But even with that, the poor in the country would be only about one in 20. For India, it would be half the population at that higher level, and about a tenth at the lower level.

What India can claim, more modestly than China, is that it is no longer the country with the largest number of absolutely poor people. That dubious honour now goes to Nigeria, with Congo likely to move into second place. Indeed, were it not for Covid (which has probably increased the number of the absolute poor in India), the country might well have been on the road to removing absolute poverty before the United Nations target year of 2030.

As has been frequently commented, India and China were at comparable levels of development and income 40 years ago. Now China has 2.7 times India’s per capita income (again, using PPP dollars). The multiple is more than twice as large if one uses “nominal” dollars at the market rates of exchange. The gap really opened up some time ago, before India overtook China to become the world’s fastest-growing large economy. It slipped back ahead of the dip in the pandemic year, while China has continued to grow.

By various metrics, China is now 10 to 15 years ahead of India. It reached India’s current per capita income 15 years ago. Similarly, on the Human Development Index (which takes in income, health, and education parameters), it is 15 years ahead of India. And on the more complex United Nations Index for Sustainable Development Goals (with 17 parameters), India is unlikely to get to China’s current index level in another decade.

Also read: Modi shouldn’t echo Xi’s policies because India isn’t China on so many levels

Such comparisons with China are bound to put India (and every other country) in the shade. But India has been making progress — as testified to by its steadily improving score on the Human Development Index. Besides, as the latest Economic Survey has pointed out by using a Bare Necessities Index (a composite of water supply, electricity, sanitation, housing, etc.), the picture has improved quite noticeably in recent years.

Other metrics either present a less positive picture, or are hard to track because of the absence of data. The 2017-18 personal consumption survey numbers have been withheld on grounds of reliability, but leaked numbers suggest a shocking decline from the level six years earlier. The last detailed poverty headcount numbers go back almost a decade. Reliable employment numbers too were hard to track till the Centre for Monitoring Indian Economy (CMIE) started its regular data flow. The CMIE’s numbers showed a dip in the employment rate even before the pandemic.

What should concern India is not just this emerging picture of a loss of momentum, but also the fact that the country is not outpacing others that are not even remotely like China in their record of growth and development. On the Sustainable Development Goals, for instance, the country’s rank of 112 in 2018 dipped to 117 the following year (though the absolute index itself improved), while neighbours like Bangladesh, Nepal, and Myanmar, plus others further afield like Cambodia have either overtaken India or are pulling further ahead. Surely, India should be doing better than them, just as it has outpaced Nigeria and Congo on the poverty numbers. That is something to think about as the country heaves a sigh of relief over a return to growth after two quarters of economic decline, and looks ahead to celebrating rapid acceleration next year.

By Special Arrangement with Business Standard.

Also read: China recognises India’s growing role in South Asia but won’t give it the ‘global power’ tag


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  1. In such a big country as India..democracy will not solve your problems…a communist govt would be able to tackle the problem of religion, inequality and overpopulation …

  2. As long as economists and journalists support the self serving agitation by rich farmers of Punjab, Haryana and Western UP, India cannot become like China. But Shri Ninan might not want to admit this.

  3. India has about 250 millon livng under the poverty belt, the majority ignores where the children come from,,in few decades they will be the majority. Do I need to be more clear ?

  4. We in India are unable to move into the machine age. India was largely made up of craftsmen in 18th century. We have truly been unable to transform from craftsmen to industrial labour . Industrialisation in China was possible due to machines and organizing production with help of machines. Even agriculture productivity increases with machines. If we have to get comfortable with machines we need large segments of
    our working class to be curious about machines and devices, how they work and how to design and manufacture them to manufacture even more stuff.

  5. China has quite a few world class companies. Also they have created many new billionaires, quite many of them in last 10-15 years. China probably had no super rich business families in the 1980’s unlike India then. We had the Tatas, Birlas, Ambanis, Godrej, Wadias …the Bombay Club in those times.

    We hardly have any world class company (maybe just a couple barely making the cut in software services). Our super richest are still the same business families from more than 30 years ago. Why is it difficult for and Indian to have good business ideas and make those ideas succeed quickly in India?

  6. Why hasn’t the Print published my comment?

    I had written yesterday that commentators like Ninan and his ilk scream INDIA IS NOT CHINA. Like recently on India’s bid to increase exports through the PLI scheme. Yet continue to compare when convenient.
    The hypocrisy.

  7. China CLAIMS to have removed poverty. Has the author verified it and satisfied with the claim? There are already reports that rural poverty in China is more acute than in India. All growth in China is urban-centric. No communist country has eradicated poverty. So, don’t expect democratic India to emulate China. Eradication of poverty will take time, and cannot happen with the snap of finger.

  8. If Ram Mandir, airports at 100 crores are a priority for a least per capita income states like UP, where is the money going to come from in India for the poor?? A mixed up priority is the hallmark of the whole country. No wonder World’s poorest in largest number live in India today.

    • I think building airport infrastructure will at least provide labour class some real jobs and opportunities to earn. Many labourers will migrate from villages to do labour for building the airports in UP. And of course the capitalists will make some money. Handouts do not stimulate economic activity effectively in India ,because the handout itself is meagre and it will be just used for monthly food or other household expenses that is all.

      Schemes like REGA keeps the poor villagers in villages and there is no incentive for them to migrate to cities to work, get skills and earn some good amount of money. China aggressively pushed it’s villagers to migrate to cities or industrial zones in search of work. In China, grandparents are taking care of children in the villages while the parents are working in urban areas. Tremendous cost for their society in terms of disruption to families however.

      Looks like a communist country seems brutally capitalistic and market oriented than ours. We are more afraid of capitalism than the Chinese!

  9. The unpalatable truth is India is lagging behind not only China but many other countries like Vietnam, South Korea, Singapore and in some respects even Bangladesh. The fact that we are a democracy doesn’t justify economic underperformance. It is time to ask hard questions and do frank introspection. Our exports are stagnant, Tax to GDP ratio is not improving despite introduction of GST, fiscal deficit is widening , the banking system has become overburdened with NPAs, unemployment is rising. Only positive so far is that inflation is under control. So far, the government has been managing somehow with surplus revenues earned from heavy taxation on oil products. This luxury would not be available as the oil prices are surging in international markets and the heavy taxation is becoming unsustainable and unbearable. The way out it seems from the budget is to borrow heavily to fund the fiscal deficit. In the process, our Debt to GDP ratio is rising and might touch 90% level very soon. Consequently, the cost of debt servicing is also rising and interest payments eats a major chunk of the revenue pie. This is a vicious cycle that is tough to break. A crisis on hand for the government. Comparisons are always unpalatable but are inevitable. Again, a very good piece by T.N.Ninan.

  10. The same people at one side support politically motivated agitations that hugely disrupt the growth of India and other side compare India with China where people are not allowed to protest even for genuine cause. The comparison here is thus grossly wrong. The author should also write how farmers protest blocking main highways which can’t be allowed in any democracy like in the US and Europe but well in India and protests like Shaheen bagh disrupt the grown of India.

    • Protests cannot disrupt economic growth.

      The rot started from UPA-2 itself. They were unwilling to shift gear to become more pro-business and labour market friendly. Now BJP is trapped in crony capitalism just like Congress was in the eighties. Both BJP and Congress are inherently socialistic minded because they are afraid of losing votes from the poor. They just do not have the wherewithal to press the accelerator towards strident economic growth.

  11. Brett Rierson, China representative for the World Food Program said, “China invested in agriculture to reduce poverty and successful agricultural projects were built up from the grassroots.”

    Well, yes China is well ahead of India in Poverty alleviation – how much we really don’t know; let us assume it is true. The Government in China being more authoritarian works to its advantage. There are no forces there that is pulling new policies apart. Probably our system of Democratic government, with a plethora of political parties and a dime a dozen political activists need to introspect. India is the only country where there is some protest on any given day. Double the number of public holidays days are lost each year due to some Bandh called by one of the hundreds of political parties supported by all opposition parties like a following mob – reasons be damned.

    Tail piece: India can’t think of removing poverty like China. India has to de it in its own way. Being a democracy, unlike China, the Governments need the unstinted support of more than the Governments. If the aim of the opposition is to only regain power and is bend on punching holes in progressive policies (since decades), I am afraid we will remain a laggard democracy. Also being a democracy the onus for progress ultimately lies with “We the people” – including the media and the “experts”

    • Industrial powerhouses after World War 2 were democracies like Germany and Japan. They were absolutely battered after the war but leapt back in 15-20 years.

      Even (earlier) authoritarian countries like Singapore, South Korea grew fast. Now China is a gigantic authoritarian country so it has shown to the world giants can also scale and grow fast economically.

      So both types democratic or authoritarian will work , it really depends on the society and it’s culture not the system of government. I think the question to be asked is: do Indians enjoy work? Do Indians like creating something new in their minds or hands? Even if someone works hard, do they have support or resources to implement their ideas fully? Indians in general are not workaholic… All the above countries have many workaholics and these workers gradually get the support & resources in their countries to become successful.

      • Hi Mandar,
        Thanks you for your comments. I respect and appreciate your views.

        Countries like Germany and Japan (less than the size of many of our states in size and population) after WW II were so down and out that they could only go up from where they were. Both the countries were helped by post war allies and both these countries did not have to spend a penny on the defence of their Nations for many many years after the war.

        Have I mentioned democracies will not work? I said that Indian democracy with 100s of political parties constantly engaged in a struggle for power also retard the progress as their quest is only for power. It is evident – as India has been tagged a s laggard democracy without being able to introduce reformist policies as desired for progress and poverty alleviation. Poverty alleviation, by the way, is not doling out rations, money and freebies.

        Tail piece: Wealth can be deployed for any purpose only when wealth is created. Public sector can’t create wealth in democracies.


  12. Thanks Mr.Ninan for the analysis. Going by the title of the article, it is not too difficult to come up with an answer and it would be much easier for person like you. I think, the question, we need to ask is – do we want to take the route that China has taken to reduce the poverty? If you value democracy & development together, I am sure India would be at the same level as China. While measuring progress, we cannot ignore political system adopted. No one compares, wealth with Gulf countries, but everyone bench marks development with US, UK, EU, Japan, Aus, NZ, Canada and Korea. Singapore is reach but freedom is curtailed and does not find itself in the same league as countries mentioned.

  13. Heh heh heh…so convenient for the Lutyens crowd of hacks. Other day S. Ankleswar Aiyar had a screaming headline: INDIA IS NOT CHINA! And Ninan has used this headline so many times too, most recently on govt trying to stimulate exports through PLI.
    These pseudo economic commentators should realise their readers are not dumb. And they have long reached their sell-by date.

  14. India should have consistent leadership which can take decisions that help the country. China started on that path in 80’s with Deng Xioaping leadership. We have India first leadership during Vajpayee leadership and now Modi. China do not have breaking India forces like leftists and congress. China controlled it’s only Muslim state of Uyighurs. They implemented 1, now 2 children policy. So they controlled runaway population. They made education compulsory. on and on. Overall it took China 25 years to reduce poverty. We got consistent India first government in 2014. So we need such government for another 15 years atleast. If BJP losses next election we will be back to square one. Corruption, minority appeasement, freebies etc etc

  15. China had one child policy for decades and lot of other factors contributing to present state. India with such high poulation growth is not able to creat job oppertunities and there by poverty cannot be eradicated at the same pace as china. plus India is service proivder compared to China a manufacturing hub and Manufactruring provide more jobs then service sector

  16. Well the author stopped short from telling what is the reason, so let me do the honours – we Indians have a group mentality, we want to extract largesse from state at the expense of others. For example, the Punjabi farmers want to extract all sorts of benefits from state at the expense of other farmers and tax payers. We would be left with better schools, health infrastructure, public transport had our government not expended freebies on water depleting crops by Punjabi farmers.

    • Don’t forget our PSUs that survive on tax payers money and PSBs which have become a conduit for transferring the money of tax payers to crony capitalists.

  17. The author is wrong in comparing India with China. China isn’t a democracy and doesn’t provide the right numbers.

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