COMPARATIVE DEVELOPMENT EXPERIENCES OF INDIA AND ITS NEIGHBOURS

1. Developmental path

• India and Pakistan became independent nations in 1947 and the Republic of China was established in 1949.
• All three countries had started planning their development strategies in similar ways.
• India announced its first Five Year Plan for 1951-56; Pakistan announced its first five-year plan (Now called the Medium Term Development Plan in 1956.
• China announced its First Five Year plan in 1953.
• India and Pakistan adopted similar strategies, such as creating a large public sector and raising public expenditure on social development.

China

• After the establishment of the People’s Republic of China under one-party rule, all critical sectors of the economy, enterprises and lands owned and operated by individuals were brought under government control.
• The Great Leap Forward (GLF) campaign initiated in 1958 aimed at industrializing the country on a massive scale.
• People were encouraged to set up industries in their backyards. In rural areas, communes were started.
• Under the Commune system, people collectively cultivated lands. In 1958, there were 26, 000 communes covering almost all of the farm population.
• GLF's campaign met with many problems. A severe drought caused havoc in China killing about 30 million people.
• When Russia had conflicts with China, It withdrew its professionals who had earlier been sent to China to help in the Industrialization process.
• In 1965, Mao introduced the Great Proletarian Cultural Revolution (1966-76) under which students and professionals were sent to work and learn from the countryside.
• The present-day fast industrial growth in China can be traced back to the reforms introduced in 1978.
• China introduced reforms in phases, in the initial phase; reforms were initiated in the agriculture, foreign trade and investment sectors.
• In agriculture, for instance, commune lands were divided into small plots, which were allocated to individual households. They were allowed to keep all income from the land after paying stipulated taxes.
• In the later phase, reforms were initiated in the industrial sector. Private sector firms, in general, and township and village enterprises, i.e. those enterprises which were owned and operated by local collectives in particular, were allowed to produce goods.
• At this stage, enterprises owned by the government (State-Owned Enterprises), In India it is public sector enterprises, were made to face competition.
• The reform process also involved dual pricing; which means fixing the prices in two ways, farmers and industrial units were required to buy and sell fixed quantities of inputs and outputs.
• Based on the price fixed by the government the rest were purchased and sold at market prices.
• Over the years, as production increased, the proportion of goods or inputs transacted in the market also increased.
• To attract foreign investors, special economic zones were set up.

Pakistan

• It also follows the mixed economy model with the co-existence of public and private sectors.
• In the late 1950s and 1960s, it introduced a variety of regulated policy frameworks.
• The Policy combined tariff protection for the manufacturing of consumer goods with direct import controls on competing imports.
• The introduction of the Green Revolution led to mechanization and an increase in public investment in infrastructure in select areas.
• This finally led to a rise in the production of food grains. This changed the agrarian structure dramatically.
• In the 1970s nationalization of capital goods industries took place.
• Pakistan then shifted its policy orientation in the late 1970s and 1980s when the major trust areas were denationalization and encouragement of the private sector.
• During this period, Pakistan also received financial support from Western nations and remittances from the continuously increasing outflow of emigrants to the Middle East. In 1988 reforms were initiated in the country.

2. Demographic indicators

• One-child norm introduced in China in the late 1970s was the major reason for low population growth.
• This measure led to a decline in the sex ratio, the proportion of females per 1000 males.
• In recent times, all three countries have adopted various measures to improve the situation.
• One-child norm and the resultant arrest in the growth of the population also have other implications.
• After a few decades, in China, there will be more elderly people in proportion to young people. This led China to allow couples to have two children.
• The fertility rate is also low in China and very high in Pakistan. Urbanisation is high in China with India having 34 per cent of its people living in urban areas.

3. Gross Domestic Product and Sectors

• One of the much-talked issues around the world about China is its growth in Gross Domestic Product.
• China has the second-largest GDP (PPP) of $22.5 trillion in the world, whereas, India’s GDP is $9.03 trillion and Pakistan’s GDP is $0.94 trillion, roughly about 11 per cent of India’s GDP.
• India’s GDP is about 41 per cent of China’s GDP.
• Many developed countries find it difficult to maintain a growth rate of even 5 per cent, but China was able to maintain near double-digit growth during the 1980s.
• Pakistan was ahead of India, China was having double-digit growth and India was at the bottom.
• In 2015-17, there was a decline in Pakistan and China’s growth rates, whereas India met with a moderate increase in growth rates.
• The reform processes and political instability over a long period as reasons behind the declining growth rate in Pakistan.
• In China, due to topographic and climatic conditions, the area suitable for cultivation is relatively small only about 10 per cent of its total land area.
• The total cultivable area in China accounts for 40 per cent of the cultivable area in India.
• Until the 1980s, more than 80 per cent of the people in China were dependent on farming as their sole source of livelihood.
• The government encouraged people to leave their fields and pursue other activities such as handicrafts, commerce and transport.
• In 2018-19 with 26 per cent of its workforce engaged in agriculture, its contribution to the GVA in China is 7 per cent.
• In both India and Pakistan, the contribution of agriculture to GVA was 16 and 24 per cent respectively, but the proportion of the workforce that works in this sector is more in India.
• In Pakistan, about 41 per cent of people work in agriculture, in India, it is 43 per cent.
• Twenty-four per cent of Pakistan's workforce is engaged in the industry but it produces 19 per cent of GVA.
• In India, the Industry workforce accounts for 25 per cent but produces goods worth 30 per cent of GVA.
• In China, industries contribute to GVA at 41 and employ 28 per cent of the workforce.
• In all three countries, the service sector contributes the highest share of GVA.
• In the 1980s India, China and Pakistan employed 17, 12 and 27 per cent of their workforce in the service sector respectively.
• In 2019, it has reached the level of 32, 46 and 35 per cent, respectively.

4. Indicators of human development

• China is moving ahead of India and Pakistan.
• The indicators are income indicators such as GDP per capita or the proportion of the population below the poverty line or health indicators such as mortality rates, access to sanitation, literacy, life expectancy or malnourishment.
• China and Pakistan are ahead of India in reducing the proportion of people below the poverty line and also their performance in sanitation.
• In China for one lakh births, only 29 women die whereas in India and Pakistan about 133 and 140 respectively.
• Some obvious liberty indicators like measures of the extent of Constitutional protection given to the rights of citizens or the extent of constitutional protection of the Independence of the Judiciary and the Rule of law have not even been introduced so far.

5. Development strategies for an appraisal

• To learn from the economic performance of our neighbouring countries, it is necessary to have an understanding of the roots of their successes and failures.
• It is also necessary to distinguish between and contrast the different phases of their strategies.
• Though countries go through their development phases differently China in 1978, Pakistan in 1988 and India in 1991
• China did not have any compulsion to introduce reforms as dictated by the World Bank and International Monetary Fund to India and Pakistan.
• The new leadership at that time in China was not happy with the slow pace of growth and lack of modernisation in the Chinese economy under Maoist rule.
• They felt that the Maoist vision of economic development based on decentralisation, self-sufficiency and shunning of foreign technology, goods and capital had failed.
• Despite extensive land reforms, collectivisation, the Great Leap Forward and other initiatives.
• It was found that the establishment of infrastructure in the areas of education and health, land reforms, the long existence of decentralised planning and the existence of small enterprises had helped positively in improving the social and income indicators in the post-reform period.
• There has already been a massive extension of basic health services in rural areas.
• Through the commune system, there was a more equitable distribution of food grains.
• Experts also point out that each reform measure was first implemented at a smaller level and then extended on a massive scale.
• The experimentation under decentralised government enabled to access the economic, social and political costs of success or failure.