In the Asia pacific region, two countries which are attracting the Global attention are 'India' & 'China'. Over the last few years, these two countries have been put on the scale of competition to measure their respective performances and economists have always been quick to jump with their comparative analysis. Yes, a comparision is inevitable since we all are happy about India's 7%-8% growth but however, the perennial question, which continues to haunt is : "Can India's growth match China?".
Leading economists are happy to point out that very soon, India is bound to witness many impending changes in the which collectively would give a 180-degree phase-shift to its economy, putting it very much in a place from where it can hold a torch,not just a candle, to china's accomplishments. The percentage of Young population in the Job sector (both Public & Private sectors) is on rise and very soon, this factor, as they opine, is going to be a Midas'Touch for the Indian economy. I agree on that for we have witnessed a new wave of entrepreneurial talent pool which is going great guns putting enterprises in India on the Global map.Also there are many other factors which might contribute to India's growth. Yet, i still have some arguments.
Exports is the one of the most important parameters guaged to study the performance of developing nations like India and China. China has been riding extremely bullish on its export front, and India is lagging far behind particularily in the merchandise exports. Consider this: India's total merchandise exports in the year 2005 were US $ 89.8 billion, up from US $ 80billion, which reflects only a 12.25% growth. A startling fact we must digest here is that China's merchandise exports touched US $ 593.4 billion, in the same year which is much higher than the Total exports of India and its growth rate was almost 36%. another startling piece of data is that in the last decade, India's share in the total Global exports grew from 0.55% to 0.9% while China's share grew from 1.1% to 4.6%. Now, Can india compete with this range of escalation?
It is not only the quantity, but also the quality and export segments where china has been steadily climbing up in the export ladder. There was a time when China's exports predomanantly consisted of textiles, toys and footwear. Today, a range of Technology-driven products have replaced these segments. very recently, i read that Data processing machines, Audio-Visual equipments and electrical/electronic machinery and appliances are the top exported product segments from China. Infact, the exports from these segments alone equals the total merchandise exports from India.
Chinese companies have managed to tap the markets very effectively and have aggressively pushed up their exports with phenomenal rapidity. somehow, i feel that this sort of aggressive attitude is missing among the Indian Counterparts.
Though the exact reasons for this underperformance, as compared to China, remain elusive to the analysts, one can apparently begin to believe that India is still to strike the right balance and equation between skilled labour and unskilled labour structures existing here. Last year, one article in Business standard revealed that China achieved a smooth transition from unskilled labour-intensive stage to semi-skilled-labour intensive stage to Captial-Intensive stage, which is currently evident in the Chinese manufacturing and export sectors. The graph of skill improvement and capital accumulation seem to be showing an upward trend, which also reflects the transition in export segments. Hence, the products which were among the topline a decade ago are now displaced by different stream of products. Such a remarkable transition cannot be possible without a coherence between the government policies and their understanding of Global markets and untapped potential.
From what i understand, China has brought the right reforms which allowed their companies to expand and bring the unskilled-labour intensive products into the capital-intensive segment, thereby creating an export market. India, on the otherhand , has a different scenario. The topline products are from the capital intensive segment only and a huge unskilled labour intensive segment is still left untapped. Why cant Indian manufacturers tap this? Why cant they corporatize this segment, individually or collectively? Very few entrepreneurs from this sector are trying to promote their products on global-platform which can give way for an organised sector over a period of time. But since these entrepreneurs need constant support, from the government policies, nothing can be speculated at this moment. Taking a liberal view, we can only hope that the evolution of an organised skilled-labour-intensive segment might be just a by-product of their efforts to gain a foothold in the national and global markets.
For them to metamorphosize into skill-labour intensive segment,or atleast a semi-skilled one, various other factors like quality of Education, Government's initiatives etc., come into picture.We very well know how well our governments have been/are performing on this front, for if there is anything which India lacks, it is efficiency at grass-root level, even if sufficient initiatives are proposed to develop these unskilled-labour-intensive sectors.But with a galore of oppurtunities lying untapped, why is it that our government failing to study and understand the markets? Why cant the Government bring in some reforms to allow the firms in this segment to tap the potential markets globally? Why cant it learn some lessons(or even blindly imitate) from neighbours instead of indulging in Chest-beating slogans like "India Shining?" why cant it focus on issues like these instead of resorting to blatant travesties of democracy like imposing Reservation Quotas , killing the worth of merit and grooming naxalites out of future entrepreneurs?
And When can India really Compete with China?
