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Strategies that India should follow to be ahead of China
India is growing at a very faster pace but it still needs to do much to be ahead of China. Because China is growing so fast that it creates some sort of world record every week. With 1.4 billion people, China has more mobile phones than any other country. It has more high-speed rail lines and wind power. It has more Internet users. It is also the world’s biggest importer of minerals. It has already dislodged Germany from pole position as the world’s number one exporter. Just a few weeks ago, China became the world's biggest guzzler of energy, though it accepted this particular position with great reluctance. (Economic Times)
· India’s overall surplus in services comes from computer and IT services. In 2005 India has become the first exporter of computer and IT services in the world in 2005 (22 billion US$). India’s crowing about its service economy at the cost of neglecting a manufacturing base is a foolishness that may come back to haunt it. IT outsourcing, whether it is call centers, BPO, accounting, financial analysis, medical transcription or image interpretation are ephemeral goodies that can move to other pastures, based on costs, whims or convenience.
Whereas China concentrated on manufacture and infrastructure, to improve technology and money for the nation and jobs for the masses, to achieve military and economic superiority.
· Indian productivity has been kept low by policies aimed at protecting small-scale production units (reservation policy). This situation has pushed Indian firms to focus on relatively high price/quality products. However, the major constraint they face when competing in world markets is infrastructure bottlenecks (transport, ports, and shortages) which increase costs and prevent guaranteeing strict deadlines.
Thus, it stands out from the argument that India needs a more balanced economic growth that will provide jobs to the huge number of low skilled working-age population and would be compatible with less inequality in income distribution, avoid the risk of inflation and of balance of payment deficit. One condition for a sustainable growth is large scale investment in infrastructures (roads, railways, ports, communication, irrigation, power, urban and rural reconstruction) which would directly absorb large numbers of workers and, beyond remove some major handicaps faced by a large number of producers in agriculture and industry, and hence pave the way for raising allocative efficiency of investment and resource use across different sectors of the economy. Thus, India should concentrate on manufacturing sector also with labour-intensive production processes.
This policy will make the development of services and industry complementary and will help India to grow at a pace with other developed countries like China.
Source:
(Françoise Lemoine and Deniz Ünal-Kesenci, China and India in international trade: from laggards to leaders?)
http://www.southasiaanalysis.org/%5Cpapers9%5Cpaper875.html
· India’s overall surplus in services comes from computer and IT services. In 2005 India has become the first exporter of computer and IT services in the world in 2005 (22 billion US$). India’s crowing about its service economy at the cost of neglecting a manufacturing base is a foolishness that may come back to haunt it. IT outsourcing, whether it is call centers, BPO, accounting, financial analysis, medical transcription or image interpretation are ephemeral goodies that can move to other pastures, based on costs, whims or convenience.
Whereas China concentrated on manufacture and infrastructure, to improve technology and money for the nation and jobs for the masses, to achieve military and economic superiority.
· Indian productivity has been kept low by policies aimed at protecting small-scale production units (reservation policy). This situation has pushed Indian firms to focus on relatively high price/quality products. However, the major constraint they face when competing in world markets is infrastructure bottlenecks (transport, ports, and shortages) which increase costs and prevent guaranteeing strict deadlines.
Thus, it stands out from the argument that India needs a more balanced economic growth that will provide jobs to the huge number of low skilled working-age population and would be compatible with less inequality in income distribution, avoid the risk of inflation and of balance of payment deficit. One condition for a sustainable growth is large scale investment in infrastructures (roads, railways, ports, communication, irrigation, power, urban and rural reconstruction) which would directly absorb large numbers of workers and, beyond remove some major handicaps faced by a large number of producers in agriculture and industry, and hence pave the way for raising allocative efficiency of investment and resource use across different sectors of the economy. Thus, India should concentrate on manufacturing sector also with labour-intensive production processes.
This policy will make the development of services and industry complementary and will help India to grow at a pace with other developed countries like China.
Source:
(Françoise Lemoine and Deniz Ünal-Kesenci, China and India in international trade: from laggards to leaders?)
http://www.southasiaanalysis.org/%5Cpapers9%5Cpaper875.html
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