By Sushil Kutty
China is five to India’s one. Look at China on any parameter, and India lags. Whether it is the size of the economy or defence capabilities. Even in soft power, like sport and films, China outshines India. Most importantly, China is challenging the USA for global leadership, and India is happy at fifth position aiming for third. Whether it be ‘Information Technology’, ‘Artificial Intelligence’, or ‘Robotics’, India is not in China’s league.
India’s myriad disadvantages are not easy to overcome. But India also cannot wait any longer. India has to achieve a higher growth rate than that of China, and keep at it for the next two to three decades. The good news is India has already started on the path to match China’s growth.
China’s GDP growth rate has slipped to 6%, and even below, around 4% during the pandemic. India’s GDP growth rate, on the other hand, was 6.1% in the latest IMF correction, and likely to range higher in the years to come.
Can India continue to beat China in the long-term? The answer to that is, India has certain advantages. Among them, perhaps the most outstanding, India’s far younger demographics while China is plagued with an ageing population problem.
How India leverages this demographic dividend is key to its growth advantage, and China’s growth woes. The Narendra Modi regime, which has been ruling India since 2014, has been criticized for being indifferent to India’s demographic advantage, but that is politics and requires thorough diagnosis.
The Modi government contests it, but unemployment has been at its highest in 45 years. And a large part of India’s working-age population is either unemployed, inadequately employed or unemployable. The available jobs are also markedly low productivity jobs.
Worse, 40% of India’s working age population is not equipped with the skills required to get jobs, or hold jobs. The Modi government started off with a slew of skilling initiatives, but what happened to them since hasn’t been making news, or had become the “breaking news”.
The root problem can be traced to a lack of basic education despite the Right to Education becoming a law more than a decade ago. To tell the truth, India’s demographic advantage is being frittered away.
That being said, China is not complacent about India’s demographic advantage, and has made changes to its birth policies, essentially dumping the strict one-child policy that Mao Zedong enforced with remarkable concentration, and singular cruelty.
The results are there to see. The People’s Bank of China, China’s central bank, in a report in April 2021, noted with concern that India’s demographic advantage will overtake China’s by 2035, asking that China should relax its birth policies to take on a “demographically young India”, and an “immigration-friendly US”.
China’s central bank acknowledged that India was narrowing the economic gap separating the two countries. In a rather candid admission, the People’s Bank of China said China was battling an ageing population problem and a receding birth rate, which will become more pronounced and serious with the passage of time.
India, on the other hand, with China’s fading demographic dividend, was poised to achieve higher growth rates as time flew. China’s central bank admitted that in the years to come, India will continue to have an overwhelming growth advantage over China because of the favourable demographic dividend.
And India’s employable population will exceed that of China by stifling numbers. “By 2050…not only will India have a much narrower elderly population at the top, and a much wider workforce in the middle, but it will also have a wider workforce at the bottom, indicating a more abundant workforce and greater growth potential beyond 2050.”
At the same time, China has realized that education and technological advantages alone would not make up for the building demographic disadvantage. China will be hit by a negative growth rate after 2025. In fact, China’s working age population has been in decline since 2010; so it’s nothing recent, and is well on its way in the last more than one decade.
That said, what are the options for India going forward? Play the long game with “strategic patience”, say experts in the game. Also, challenging China is not for amateurs. At the same time, India cannot afford to be hasty. But catching-up will take time; and beating China at her own game even longer.
India cannot avoid engaging China. A China in decline vis a vis a rising India will be the uncomfortable truth, and could result in tensions of all sorts. The best India can do is not to allow those tensions to exacerbate. Instead, taking a cue from China’s own growth story of the 1980s and 1990s, and unmindful of China’s assertive nature, concentrate on its own growth story; and continue to take advantage of its favourable demographic dividend till as long as it lasts.
Whether the advent of a rightwing government has been a good thing or not for India will be pronounced only in the years to come; but, for the here and now, the Modi government shouldn’t lose sight of the goal to match and plausibly overtake the Chinese economy’s growth rate.
Of course, the demographic dividend should not be frittered away with short-term expediencies. The demographic advantage should not be left in isolation of a skilled and employable workforce. Quality workforce is a must for growth, and appropriately employable workforce should have employable jobs.
Prime Minister Narendra Modi and Union Finance Minister Nirmala Sitharaman should look beyond ‘Pakoranomics’, and the ‘Mudra scheme’. Just because Narendra Modi transitioned from ‘chaiwala’ to Prime Minister does not mean everybody should. Skillsets should commensurate with high-productivity jobs. Beating China with demographics requires keeping the youthful dividend engaged. Only then will India be able to lift itself up by the bootstraps sufficient enough to outlast China in the Great Growth Game. (IPA Service)