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India is passing China in population. Can its economy ever do the same?
New York Times
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NEW DELHI — India’s leaders rarely miss a chance to
cheer the nation’s many distinctions, from its status as the world’s largest
democracy to its new rank as the world’s fifth-largest economy, after recently
surpassing Britain, its former colonial overlord. Even its turn this year as
host of the Group of 20 summit is being celebrated as announcing India’s
arrival on the global stage.اضافة اعلان
Now, another milestone is approaching, though with no fanfare from Indian officials. The country will soon pass China in population, knocking it from its perch for the first time in at least three centuries, data released by the United Nations on Wednesday shows.
ChallengesBut India’s immense size and lasting growth also lay bare its enormous challenges, renewing in this latest spotlight moment a perennial, if still uncomfortable, question: When will it ever fulfill its vast promise and become a power on the order of China or the US?
“The young people have a great potential to contribute to the economy,” said Poonam Muttreja, the executive director of the Population Foundation of India. “But for them to do that requires the country to make investments in not just education but health, nutrition, and skilling for employability.”
An auto rickshaw factory in Aurangabad, India, on April 19, 2023.
There also need to be jobs. That is a long-standing deficiency for a top-heavy and at times gridlocked economy that must somehow produce 90 million new jobs before 2030, outside agriculture, to keep employment rates steady. Even in the years immediately before the pandemic, India was falling far short of that pace.
In China, a shrinking and aging population will make it harder to sustain economic growth and achieve its geopolitical ambitions to surpass the US. But in previous decades, when it was still growing, it found its way to transformative growth through export-driven manufacturing, like smaller East Asian countries did before it.
India has yet to be able to replicate that formula or to come up with one of its own that can achieve more than incremental gains.
InequalitiesIndia’s economy has grown much faster than its population for a generation, and the proportion of Indians living in extreme poverty has plummeted. Yet most Indians remain poor by global standards. To enter the top 10 percent by income, an Indian need make only about $300 a month. Famines are a thing of the past, but more than one-third of all children are malnourished.
The country’s economic shortfalls, which have bred fierce competition even for the lowest-level jobs and stoked impatience among an aspirational Indian middle class, bring the risk of instability as dreams and realities diverge.
And then there is the combustible environment created by the Hindu-first nationalism of Prime Minister Narendra Modi’s ruling party, as his support base has sped up a century-old campaign to reshape India’s pluralist democratic tradition and relegate Muslims and other minorities to second-class citizenship. Demographic numbers are part of the political provocation game, with right-wing leaders often falsely portraying India’s Muslim population of 200 million as rising sharply in proportion to the Hindu population as they call on Hindu families to have more children.
GainsModi and his lieutenants say India is heading in only one direction: Up. They point to the undeniable gains in a country that has quadrupled the size of its economy within a generation.
A factory that makes modular furniture for export in Aurangabad, India.
Among major economies, India’s is projected to be the fastest-growing this year, with the World Bank expecting it to expand 6.3 percent in the new fiscal year after a sharp downturn early in the pandemic. A rapid increase in public investment is improving the country’s lagging infrastructure. It has multiple dazzling tech startup scenes and a technologically savvy middle class, and its unique system of digital public goods is lifting up the marginalized. Its culture, from popular films to a rich tradition of music, will only grow in influence as it expands its reach to new audiences.
And now it has an enviable demographic profile, with people in their most economically productive years represented in the largest numbers. While China’s extended “one-child policy” has resulted in a steep decline in population that could put dire strain on its economy, similar extreme measures in India, like forced sterilization, were short-lived.
And India is increasingly looking to capitalize on China’s economic and diplomatic difficulties to become a higher-end manufacturing alternative — it is now producing a small share of Apple’s iPhones — and a sought-after geopolitical partner and counterweight.
“India’s time has arrived,” Modi recently declared.
ParallelsAs India passes China in population — the new UN figures show that India has surpassed mainland China and will move past the mainland and Hong Kong combined next year — the two countries are estranged, in part over a series of clashes on their shared Himalayan border.
But not long ago, Modi saw China as a nation much like his own, striving to reclaim lost glory and a fairer place in the new world order, with lessons to offer about the pursuit of prosperity.
As a state and national leader, he has met with Xi Jinping, the Chinese leader, at least 18 times — they have shared fresh coconuts as well as a seat on a swing and many waterfront and garden strolls. Beyond Modi’s penchant for the strongman power that is typical of China’s one-party rule, analysts say the Indian leader was looking to Beijing for something more fundamental: solutions to the problems posed by a huge population.
Today, China’s economy is roughly five times the size of India’s. The average citizen of China has an economic output of almost $13,000 a year, while the average Indian’s is less than $2,500. In human-development indicators, the contrast is even sharper, with infant mortality rates much higher in India, life expectancy lower, and access to sanitation less prevalent.
India started opening its quasi-socialist economy nearly a decade later. Its approach remained piecemeal, constrained by tricky coalition politics and the competing interests of industrialists, unions, farmers, and factions across its social spectrum.
“There is that element where China is a natural role model — not for its politics, but for the sheer efficiency,” said Jabin Jacob, a professor of international relations and governance studies at Shiv Nadar University near New Delhi.
ServicesThe world now has a radically different power structure than it did in 1990. China has already made itself the world’s factory, all but closing off any path India could take to competitive dominance in export-driven manufacturing.
A “Make in India” campaign, inaugurated by Modi in 2014, has been stuttering ever since. Wage costs are lower in India than in China, but much of the workforce is poorly educated, and the country has struggled to attract private investment with its restrictive labor laws and other impediments to business, including lingering protectionism.
Where India has found success is in the higher-value range of services. Companies like Tata Consultancy Services have become world leaders, while plenty of multinational firms like Goldman Sachs have more of their global staff working from India than anywhere else in the world.
But service-sector growth can go only so far in reaping India’s promise of a demographic dividend, or blunt the peril of an unemployment crisis. Hundreds of millions of people cannot find jobs or are underemployed in work that pays too little. In the state of Andhra Pradesh, for example, 35 percent of university graduates are estimated to be unemployed, unable to find work commensurate to their credentials.
A class for boys and girls at a government run school in Nima, India.
Nowhere is the competition for jobs clearer than at the coaching centers that train young Indians for the employment entrance exams at government agencies. These jobs are still coveted as private sector work remains limited and less stable.
Dhananjay Kumar, who runs a coaching center in Bihar, India’s poorest state and its youngest, with a median age of 22, estimated that 650,000 students will apply for just 600 or 700 jobs in the national civil service this year. The civil service is a tiny part of the workforce, but it is prestigious — in part because it comes with job security for life. Most applicants spend years, and a big chunk of their family’s savings, and still fail to make the cut.
ModelsThe lessons Modi is taking from China are most apparent in his push for infrastructure development, investing heavily in highways, railways, and airports to improve supply chains and connectivity.
It is uncertain how much this moment, geopolitically and demographically, will turn into a lasting pivot toward India, bringing with it expanded economic opportunity for its vast workforce.
Even as India tries to align its growing technological and economic capacity to capitalize on the Western tensions with China, it is determined to stick to its neutrality and maintain a balancing act between the US and Russia. There is also the question of whether the West’s shift from China, the linchpin of the global economy, is a temporary recalibration or a more fundamental one.
Read more Region and World
Jordan News
Now, another milestone is approaching, though with no fanfare from Indian officials. The country will soon pass China in population, knocking it from its perch for the first time in at least three centuries, data released by the United Nations on Wednesday shows.
With growth comes the prospect of a “demographic dividend”. India has a workforce that is young and expanding even as those in most other industrialized countries, including China, are aging and in some cases shrinking.With size — a population that now exceeds 1.4 billion people — comes geopolitical, economic, and cultural power that India has long sought. And with growth comes the prospect of a “demographic dividend”. India has a workforce that is young and expanding even as those in most other industrialized countries, including China, are aging and in some cases shrinking.
ChallengesBut India’s immense size and lasting growth also lay bare its enormous challenges, renewing in this latest spotlight moment a perennial, if still uncomfortable, question: When will it ever fulfill its vast promise and become a power on the order of China or the US?
“The young people have a great potential to contribute to the economy,” said Poonam Muttreja, the executive director of the Population Foundation of India. “But for them to do that requires the country to make investments in not just education but health, nutrition, and skilling for employability.”
An auto rickshaw factory in Aurangabad, India, on April 19, 2023.
There also need to be jobs. That is a long-standing deficiency for a top-heavy and at times gridlocked economy that must somehow produce 90 million new jobs before 2030, outside agriculture, to keep employment rates steady. Even in the years immediately before the pandemic, India was falling far short of that pace.
In China, a shrinking and aging population will make it harder to sustain economic growth and achieve its geopolitical ambitions to surpass the US. But in previous decades, when it was still growing, it found its way to transformative growth through export-driven manufacturing, like smaller East Asian countries did before it.
India has yet to be able to replicate that formula or to come up with one of its own that can achieve more than incremental gains.
InequalitiesIndia’s economy has grown much faster than its population for a generation, and the proportion of Indians living in extreme poverty has plummeted. Yet most Indians remain poor by global standards. To enter the top 10 percent by income, an Indian need make only about $300 a month. Famines are a thing of the past, but more than one-third of all children are malnourished.
The country’s economic shortfalls, which have bred fierce competition even for the lowest-level jobs and stoked impatience among an aspirational Indian middle class, bring the risk of instability as dreams and realities diverge.
“The young people have a great potential to contribute to the economy, but for them to do that requires the country to make investments in not just education but health, nutrition, and skilling for employability.”The rate of development across the huge country remains widely unequal, with some Indian states akin to middle-income nations and others struggling to provide the basics. The distribution of resources is increasingly becoming a tense political issue, testing India’s federal system.
And then there is the combustible environment created by the Hindu-first nationalism of Prime Minister Narendra Modi’s ruling party, as his support base has sped up a century-old campaign to reshape India’s pluralist democratic tradition and relegate Muslims and other minorities to second-class citizenship. Demographic numbers are part of the political provocation game, with right-wing leaders often falsely portraying India’s Muslim population of 200 million as rising sharply in proportion to the Hindu population as they call on Hindu families to have more children.
GainsModi and his lieutenants say India is heading in only one direction: Up. They point to the undeniable gains in a country that has quadrupled the size of its economy within a generation.
A factory that makes modular furniture for export in Aurangabad, India.
Among major economies, India’s is projected to be the fastest-growing this year, with the World Bank expecting it to expand 6.3 percent in the new fiscal year after a sharp downturn early in the pandemic. A rapid increase in public investment is improving the country’s lagging infrastructure. It has multiple dazzling tech startup scenes and a technologically savvy middle class, and its unique system of digital public goods is lifting up the marginalized. Its culture, from popular films to a rich tradition of music, will only grow in influence as it expands its reach to new audiences.
And now it has an enviable demographic profile, with people in their most economically productive years represented in the largest numbers. While China’s extended “one-child policy” has resulted in a steep decline in population that could put dire strain on its economy, similar extreme measures in India, like forced sterilization, were short-lived.
Among major economies, India’s is projected to be the fastest-growing this year, with the World Bank expecting it to expand 6.3 percent in the new fiscal year after a sharp downturn early in the pandemic.Instead, India addressed its fears of overpopulation and reduced the growth rate through more organic and gradual ways, including serious efforts to promote contraception and smaller families. As mass education has spread, especially among girls and women, the fertility rate has dipped to just above the level required to maintain the current population size.
And India is increasingly looking to capitalize on China’s economic and diplomatic difficulties to become a higher-end manufacturing alternative — it is now producing a small share of Apple’s iPhones — and a sought-after geopolitical partner and counterweight.
“India’s time has arrived,” Modi recently declared.
ParallelsAs India passes China in population — the new UN figures show that India has surpassed mainland China and will move past the mainland and Hong Kong combined next year — the two countries are estranged, in part over a series of clashes on their shared Himalayan border.
But not long ago, Modi saw China as a nation much like his own, striving to reclaim lost glory and a fairer place in the new world order, with lessons to offer about the pursuit of prosperity.
As a state and national leader, he has met with Xi Jinping, the Chinese leader, at least 18 times — they have shared fresh coconuts as well as a seat on a swing and many waterfront and garden strolls. Beyond Modi’s penchant for the strongman power that is typical of China’s one-party rule, analysts say the Indian leader was looking to Beijing for something more fundamental: solutions to the problems posed by a huge population.
Today, China’s economy is roughly five times the size of India’s. The average citizen of China has an economic output of almost $13,000 a year, while the average Indian’s is less than $2,500. In human-development indicators, the contrast is even sharper, with infant mortality rates much higher in India, life expectancy lower, and access to sanitation less prevalent.
Today, China’s economy is roughly five times the size of India’s. The average citizen of China has an economic output of almost $13,000 a year, while the average Indian’s is less than $2,500.The divergence, analysts say, comes down largely to China’s central consolidation of policy power, serious land reform, an earlier start in opening up its economy to market forces starting in the late 1970s, and its single-minded focus on export-led growth. China took the first-mover advantage and then compounded its dominance as it pursued its plans relentlessly.
India started opening its quasi-socialist economy nearly a decade later. Its approach remained piecemeal, constrained by tricky coalition politics and the competing interests of industrialists, unions, farmers, and factions across its social spectrum.
“There is that element where China is a natural role model — not for its politics, but for the sheer efficiency,” said Jabin Jacob, a professor of international relations and governance studies at Shiv Nadar University near New Delhi.
ServicesThe world now has a radically different power structure than it did in 1990. China has already made itself the world’s factory, all but closing off any path India could take to competitive dominance in export-driven manufacturing.
A “Make in India” campaign, inaugurated by Modi in 2014, has been stuttering ever since. Wage costs are lower in India than in China, but much of the workforce is poorly educated, and the country has struggled to attract private investment with its restrictive labor laws and other impediments to business, including lingering protectionism.
“There is that element where China is a natural role model — not for its politics, but for the sheer efficiency.”To become as rich as China, economists say, India needs to either transform its development model radically — doing whatever it takes to become a center for globalized light manufacturing — or chart a path no other country has tried before.
Where India has found success is in the higher-value range of services. Companies like Tata Consultancy Services have become world leaders, while plenty of multinational firms like Goldman Sachs have more of their global staff working from India than anywhere else in the world.
But service-sector growth can go only so far in reaping India’s promise of a demographic dividend, or blunt the peril of an unemployment crisis. Hundreds of millions of people cannot find jobs or are underemployed in work that pays too little. In the state of Andhra Pradesh, for example, 35 percent of university graduates are estimated to be unemployed, unable to find work commensurate to their credentials.
A class for boys and girls at a government run school in Nima, India.
Nowhere is the competition for jobs clearer than at the coaching centers that train young Indians for the employment entrance exams at government agencies. These jobs are still coveted as private sector work remains limited and less stable.
Dhananjay Kumar, who runs a coaching center in Bihar, India’s poorest state and its youngest, with a median age of 22, estimated that 650,000 students will apply for just 600 or 700 jobs in the national civil service this year. The civil service is a tiny part of the workforce, but it is prestigious — in part because it comes with job security for life. Most applicants spend years, and a big chunk of their family’s savings, and still fail to make the cut.
ModelsThe lessons Modi is taking from China are most apparent in his push for infrastructure development, investing heavily in highways, railways, and airports to improve supply chains and connectivity.
To become as rich as China, economists say, India needs to either transform its development model radically — doing whatever it takes to become a center for globalized light manufacturing — or chart a path no other country has tried before.India has quintupled its annual spending on roads and railways during Modi’s nine years in power. In some weeks, he has been able to preside over ribbon cuttings at a new airport, a new highway, and a new rail service.
It is uncertain how much this moment, geopolitically and demographically, will turn into a lasting pivot toward India, bringing with it expanded economic opportunity for its vast workforce.
Even as India tries to align its growing technological and economic capacity to capitalize on the Western tensions with China, it is determined to stick to its neutrality and maintain a balancing act between the US and Russia. There is also the question of whether the West’s shift from China, the linchpin of the global economy, is a temporary recalibration or a more fundamental one.
Read more Region and World
Jordan News
