Finance, Forex and Investments

Comparing China and India economy?

Will India overtake China's growth? Will India's economy overtake China's?

Public Comments

1. India can overtake China, but one of India's biggest issues is its poverty. The government is so weak that it cannot even tax the billionaires (Mittal, Ambani etc) in order to help the slum people. But if effective tax collection is put in place to deal with this poverty, and infrastructure is invested in then yes India could overtake China. Economic growth in China has helped neighboring countries (Vietnam, Indonesia, Malysia), so economic growth in India should also benefit neighboring countries to India (Bangladesh, Pakistan, SL).
2. I'm agree with Hass ... India's infrastructure and people may look poor ... but internally the story is some1 else ... U remove the corruption from here and then see what happens to the rest of the countries !!
3. Hass and Voyager answer the question of "Can India overtake China", not "Will it". I think not 1. There is no reason to believe that India's political or social situation is going to change so radically as to eliminate corruption, improve the tax collection system substantially, provide for effective education for all, drastically increase investments in infrastructure, etc. - all the things needed to become more business friendly http://data.worldbank.org/indicator/IC.BUS.EASE.XQ 2. China now has a GDP of about $5.7 trillion while India's GDP is only about $1.4 trillion. http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal) That is a factor of over 4. Suppose India's growth rate were 2% higher than China's. Then the doubling time would be about 35 years http://en.wikipedia.org/wiki/Doubling_time so India would catch up to China in about 70 years. But China's growth rate is about 10% and India's is about 8.3% http://en.wikipedia.org/wiki/List_of_countries_by_real_GDP_growth_rate so to get a 2% growth rate advantage over China, India would have to increase its growth rate by 3.7% to over 12%. Even starting from a low rate, that would be a major achievement; raising it from a base of over 8% would be amazing. 3. Of course, China is not going to maintain its 10% growth rate for 70 years, but no country has ever maintained a 12% growth rate for any significant length of time either. Note that neither India nor China have had their current high growth rates for even 40 years. China's reform started in 1978 http://en.wikipedia.org/wiki/Chinese_economic_reform#Course_of_reforms India's in the 1990s. http://en.wikipedia.org/wiki/Economic_liberalisation_in_India So neither has a history of long term economic policy stability combined with high growth rates. What that means is that if India is ever to overtake China, it will be under circumstances that no one can predict today. 4. It is the case that India does have some advantages over China http://chrisblattman.com/2008/08/20/who-will-grow-faster-in-the-future-china-or-india/ http://chrisblattman.com/2009/08/11/china-india-and-africa-the-big-picture/ But so far, its government hasn't been very effective of taking advantage of them, and there is no reason to believe that will change And yes, I know, putting facts and numbers into a lovely argument just destroys the dream. Sorry.