Because of Modi government, India can't match China's economic growth

Ashok Swain
Ashok SwainMay 08, 2017 | 08:53

Because of Modi government, India can't match China's economic growth

In the last three years, the Narendra Modi government has never missed a chance to gloat over the fact that India has superseded China as the world's fastest-growing large economy. The Bretton Woods institutions and western capitals too have regularly underscored this. According to the latest figures, the Indian economy is growing annually at 7.1 percent, while the Chinese economy's growth has fallen to 6.7 percent.


That has encouraged Hindu nationalist forces to project India as an alternate global power vis-à-vis China. India's hawkish commentators too regularly provoke the government to adopt a bellicose approach against China and abandon the working bilateral relationship the two neighbours have developed since early 1980s.

They prefer to forget China's overwhelming military superiority: while India's military spending in 2016 was $55.9 billion, China spent $215 billion, nearly four times more.

Even if India's economy is growing faster than China, it does not mean that India has become economically as powerful as China. While India's Gross Domestic Product (GDP) was $2.5 trillion in 2016, China's GDP is nearly five times of that, at $11.4 trillion.

That also reflects in the per capita GDP: while it is $8,260 for China, for India it is $1,718.

India might overtake China in terms of population by 2022, but to overtake its per capita GDP, the Indian economy needs to grow more than 30 percent annually.

Otherwise, at this rate, it will take more than 125 years to match China's success.

Even so, comparing the Indian economy with the Chinese economy has become almost a pastime for many. China has transformed itself from a centrally-planned closed economy in the '70s to become world's factory.


The economic surge of authoritarian China in the post-1978 period had posed a stark contrast to the near financial bankruptcy of the Indian democracy in the early '90s.

It supported the ill-informed thesis that it is easier to achieve economic growth in a top-down command economy like China than a messy democratic system like India.

However, India's impressive economic growth with the arrival of this century resulted in a transformation of not only the Indian economy, but also the tenor of the debate.

China and India were talked about in the same breath as two fast-growing giants, who would be increasingly playing a larger role in global markets.

There is no clear consensus on the causal relationship between democracy and economic development. There is a never-ending debate over whether economic development comes before democratisation or vice-versa.

Several impoverished countries like Chile, Singapore, Taiwan, Malaysia, Thailand and South Korea have achieved rapid economic growth under authoritarian regimes.

At the same time, there are also many autocrats who have brought economic miseries to their peoples; the Congo under Mobutu, Zimbabwe under Mugabe, North Korea under Kim Jong II, and the Philippines under Marcos.


Most of the rich countries in the West are developed democracies.

At the same time, some democracies have paid the price for the irresponsible macroeconomic policies of their ruling elite, including Columbia, Sri Lanka and Indonesia.

gdp-small_0303170411_050717113015.jpgWhile India's (GDP was $2.5 trillion in 2016, China's GDP is nearly five times of that, at $11.4 trillion. Photo: Reuters

Thus, it is prudent not to argue that either democracy or dictatorship is a necessary condition for economic growth.

What is indeed necessary for an economy to grow is an enabling internal as well as external security environment.

What China did since 1978 and India followed in this century is that while planting the liberal economic policy, the ruling establishment provided a fertile ground for it to take root and bear the fruits.

A country's economic cannot grow when it is suffering from internal instability and engaged in hostility with its key neighbours.

In spite of numerous territorial disputes with its neighbours, China has not fought a war since March 1979.

Till 2008, it also kept from projecting itself as a challenger to the US in global politics. Internally, the Tiananmen Square Protests of 1989 were the last major challenge to the regime in the country.

Former prime ministers Atal Bihari Vajpayee and Manmohan Singh both realised the critical importance of a peaceful neighbourhood for success on the economic front at home.

That was the reason Vajpayee travelled to Lahore in 1999.

The Mumbai attacks did not deter Manmohan Singh from continuing to pursue the dialogue process with Pakistan.

In spite of tremendous American pressure, he continued to refuse to sign LEMOA to maintain a working friendship with China.

Both relative peace in the region and socio-political stability within the country helped the Indian economy to grow.

India has not witnessed large-scale communal riots since 2002.

In 2006, Manmohan Singh's statement that minorities must have the first claim on resources to share equitably the fruits of development was primarily directed at buying peace with the country's then increasingly restless Muslim minority.

In spite of the increasing Maoist threat, he consistently emphasised the need for development and never adopted the law-and-order approach alone to address this challenge.

India's economy had taken the advantage of such regional peace and internal stability for nearly one-and-half decade.

However, Narendra Modi's hypernationalist ideology has forced India to adopt a confrontational politics vis-a-vis Pakistan and China for the last two years.

War cries against Pakistan and even China have become common due to political opportunism, which has seriously destabilised regional peace.

At the same time, Hindutva politics at home has brought further fissures in India's stratified society. India's minorities have been pushed to the edge, particularly its 180 million-strong Muslims.

Hindutva politics has not only alienated minority communities, but also marginalised caste groups, including Dalits. India has never seemed as unstable internally as it is today.

It is but foolish to expect India to match China on the economic front considering the socio-political quagmire the Indian democracy has been thrown into.

Narendra Modi on the one hand is talking about development and economic growth while providing the space and opportunity to pseudo-nationalists and Hindutva thugs to create an entirely hindering environment, internally as well as regionally.

If it must continue its economic growth and development, India needs to move away from ultra-nationalist majoritarian path as soon as possible.

For peace and prosperity, considering India's social and geographical peculiarities, it must follow a policy of equity, inclusivity and diversity at home, practise benign bilateralism with its neighbours.

Last updated: May 08, 2017 | 18:22
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