India v/s China

Route to 2030
By
Hashmeet Kaur
MFM Sem I

Economic Comparison :
Basis

India

Economy Present Overview Investors' perceptions of India

improved in early 2014, due to a
reduction of the current account
deficit and expectations of postelection economic reform,
resulting in a surge of inbound
capital flows and stabilization of
the rupee.

China
China has made only marginal
progress toward rebalancing goals.
The new government of President
XI Jinping has signalled a greater
willingness to undertake reforms
that focus on China's long-term
economic health.

GDP Purchasing Power

Parity

$4.99 trillion (2013 est.)

$13.39 trillion (2013 est.)

Household Income
Consumption

Lowest 10%: 3.6%

Highest 10%: 31.1% (2005)

Lowest 10%: 1.7%

Highest 10%: 30%

Labor Force

487.3 million

797.6 million , population at

working age (15-64 years) was
340 million (2013 est.)

Imports

$467.5 billion

$1.95 trillion

Debt - External

$412.2 billion

$863.2 billion

Demographic Comparison :
Basis

India

China

Age Structure

15-24 years: 18.1% (male

118,696,540/female 105,342,764)
25-54 years: 40.6% (male
258,202,535/female 243,293,143)
65 years and over: 5.8% (male
34,133,175/female 37,810,599)

15-24 years: 14.7% (male

105,763,058/female 93,903,845)
25-54 years: 47.2% (male
327,130,324/female 313,029,536)
65 years and over: 9.6% (male
62,646,075/female 68,102,830)

Literacy

Total population: 62.8%

Total population: 95.1%

Education Expenditure

3.2% of GDP

Not Accounted

Urbanization

Urban population: 31.3% of

total population

Urban population: 50.6% of

total population

Health Expenditure

3.9% of GDP

5.2% of GDP

Obesity Adult Prevalence

Rate

1.9% of Total Population.

5.7% of Total Population.

Median Age

27 years

36.7 years

Indian Economy Negative :

Basis for Negative

Description

Inflation

Fuelled by rising wages, property prices and food prices Inflation is

currently between 8-10%.

Poor Educational Standards

High levels of illiteracy amongst the population

Poor Infrastructure

Indian public services are creaking under the strain of bureaucracy and
inefficiency

BOP Deterioration

The current account reached a peak of 6% of GDP.

Large Budget Deficit

Largest budget deficits in the developing world. Excluding subsidies it

amounts to nearly 8% of GDP

Rigid Labor Laws

Firms employing more than 100 people cannot fire workers without
government permission. The effect of this is to discourage firms from
expanding to over 100 people.

Inefficient Agriculture

2013/14 has seen a slowdown in the rate of economic growth to 4-5%.

Real GDP per capita growth is even lower.

Indian Economy Positive :

Basis for Positive

Description

Population as an Asset

1.2 Billion and counting , more human capital and more consumers.

Positive Liberalization
Economic Reforms

The current Indian government (in 2014) has showcased a positive

mind-set towards liberalization of the economy. Key Investments
pacts signed with Australia, Japan and Fiji for more FDI Inflow.

Improved Urbanization

The emergence of satellite towns for example for Delhi the National
Capital Region that includes Noida, Gurgaon, Ghaziabad, Faridabad.

Positive Democratic
Sentiment

This point is largely inspired from recent developments in the political

front in India.
Positive response to BJP policy.

Robust Banking Systems

RBI policy has been successful to control inflation and CAD.

Entrepreneurial Mindset

More than 12 million start ups in India. Leading to more FDI Inflow
and increase awareness.

SMEs

Accounting for 15% of GDP.

Promoting entrepreneurial talent and creating sustainable
employment.

Chinese Economy Negative :

Basis for Negative

Description

China's accession to the

WTO

Chinese enterprises do not have adequate competitiveness in international

markets.

Average industrial
concentration

Average industrial concentration is too low to compete with foreign

counterparts.

Issue of Agriculture

The price of agricultural land has been decreasing since 1996.,while an

average peasant's annual income in purely agricultural areas is only $80.

China's GDP

Might increase temporarily, but employment, tax and wage per GDP unit
will decrease continuously

Foreign capital

To indicate how China's economy relies on foreign capital and markets, the
ratio of the sum of export and import to GDP rose to 46% in 2010.

Deflation crisis

Workers and peasants experienced a ten years' stagnation of income,

while cadres in central government and rich regional governments enjoyed
an income growth to a factor of ten and white-collar employees.

Rapid growth of the

Unemployed population

With more state-owned enterprises going bankrupt, public feeling against

market-oriented reform strengthened.

Chinese Economy Positive :

Basis for Positive

Description

Gross Domestic Product

(GDP)

$13.39 trillion as compared to $4.99 trillion for India.

Labor Force

797.6 million as compared to 487.3 million for India.

Unemployment Rate

4.1% of Total Population as compared to 8.8% to Indian population.

Budget

Revenues: $2.118 trillion

Expenditure: $2.292 trillion

Exports

$2.21 trillion as compared to $313 billion for India.

Taxes and Other

Revenues

19.4% of GDP as compared to 10.3% of GDP for India.

Gross National Saving

50% of GDP as compared to 33.7% of GDP for India.

Concluding Analysis :
According to the data, it is evident that as the India
heads towards 2030 it will eventually overtake Chinese
Economy as supported by positive demographics and
rising economic indicators.

Key facts that will determine Indias lead would be :

I. Positive Investor Sentiment,
II. Stable Political Environment,
III. FDI Inflow in key infrastructure and technological
areas,
IV. Private-Public-Partnerships (PPP) in future,
V. Social Initiatives like Swach Bharat Campaign, Toilet
for All, Education for All etc.

Military
Comparison :

Working Age
Comparison :

Conclusion
According to UNPD, India will overtake China in 2030 because of
Demographic, Economic and Political Reforms welling in India .

CONCLUSION
India and China are the two fastest emerging economies
among the major global players.
Both nations have shown remarkable development after
liberalization.
Bilateral trade between these two super nations is one the
important aspects. The bilateral trade has grown
remarkably in the last years.
Today China is being recognized as Indias largest trading
partner and has become one of the top three trading
partners of India whereas India has reserved its place
among the top ten trading partners of China.