NATIONAL INCOME OF CHINA VS INDIA

Group Members
Moiz Attarwala 02
Shubhangi Khatavkar 13

Muruza Kothari 17
Khaty Mistry 20 Aziz Motiwala 21

CONTENTS
INTRODUCTION CHINA GDP GROTH INDIA GDP GROWTH

GROWTH STORY OF INDIA GROWTH STORY OF CHINA

STRENTHS AND WEAKNESS CHINA OVER INDIA

INTRODUCTION
Rapid catch-up growth in Asia will bring about a historic shift in the

center of gravity of the world economy. Since 1800, the North Atlantic economies have been the worlds dominant economies and political powers. The cataclysms of World War I, the Great Depression, and World War III did not shake the dominance of the North Atlantic economies, though they did shift the balance of geopolitical influence away from Europe, especially the British Empire, to the United States. Now, after many centuries, the unquestioned economic and geopolitical dominance of the North Atlantic will end. The American century will end sometime in the second quarter of the twenty-first century, when Asia becomes the center of gravity of the world economy, in the sense of producing more than half of the worlds income. The end of the American century will not be the result of any collapse of Americas well-being but rather the rise of Asias economic power.

Growth story of India

Indias economy has come a long way, especially since the start of

this century. It is impossible to ignore Indias rise in every field. Every nation is keeping a close eye on Indias growth story, and why not, India is on its way to become a superpower. GDP at market prices has increased from US$ 20 billion in 195051 to US$ 912 billion in 2006-07 and is expected to cross a trillion dollars in the current year. In terms of purchasing power parity (PPP), Indias GDP at US$ 4 trillion in 2006-07 accounted for 6.3 per cent of global GDP. Average annual economic growth, which had been constant and tardy at 3.5 per cent during the first thirty years of Independence, increased to 5.7 per cent during the 1990s and, since 2003-04, the average rate has increased further to 8.6 per cent. 2006-07, in particular, was a splendid year with the GDP growing at 9.4 per cent.

 This growth has not been jobless growth. During 1999-

2000 to 2004-05, India added to its workforce about 12 million people each year. During this period, the rate of growth of employment was 2.9 per cent per year. India, after China, is the fastest growing economy of the world. The proportion of people living below the poverty line in India has declined from 51.3 per cent in 1977-78 to about 22 per cent in 2004-05. But in absolute terms they still number around 250

 More than one third of our 1.1 billion people live on less than one dollar a day. We have achieved an enrollment ratio of 95 per cent in primary education. Of the children in

school, 73 per cent are now reaching Grade V. India has helped in pushing the Asia Pacific regions overall enrollment rate to 94 per cent. India is also on target on elimination of gender disparity in primary and secondary education. Government have a guaranteed wage employment programmed that assures to the poor work for 100 days in a year and provides them a wage of Rs 80 (or US$ 2) per day.

GDP - real growth rate: 9% (2007 est.)

Year
GDP real growth rate (%) 5.5 6 4.3 4.3 8.3 6.2 8.4 9.2 8.5

2000 2001 2002 2003 2004 2005 2006 2007 2008

Growth story of China

1983-85 Double-digit real GDP growth accompanied the

first wave of foreign investment into China, and non-state enterprises started to develop.

1989-91 Growth slowed after the government braked the overheating economy following an aborted effort at wholesale price reform in 1988 which resulted in panic buying and runaway inflation. Price stability was achieved by cancelling large fixed investment projects, slowing domestic demand. Foreign investment fell off after the Beijing Massacre of June 1989.

 1992 Deng Xiaoping's Southern Tour massively

boosted foreign direct investment inflows into coastal areas and started a wave of government investment in Shanghai. Record trade and GDP growth and inflation followed.

 Especially after the publication of the 1998 GDP figures,

economists, both in China and abroad, have raised serious doubts about the quality of China's national accounts, which appeared in the late 1990s to overstate economic growth and are now suspected of understating growth. This may be because the statistical system tends to overestimate output at the trough of the cycle and underestimate output at the peak. However, the country's first production census discovered at the end of 2005 that GDP has recently been grossly underestimated as a result of a failure to take into account the rapid growth of the services sector. As a result, growth rates for 2003-2005 are now recorded at around 10% per year in real terms. Despite efforts to cool the overheating economy, the officially recorded GDP growth rate was 11.4% in 2007.

Strengths of China over India:

The continuous and steady increasing GDP per year easily

shows the growth and development of country is going on at a smooth rate. It is a larger country than India in terms of area so land resources are more i.e. less shortage of land though its population is greater than that of India. There is an increased growth seen in China in the Secondary industries. Hence increasing employment facilities. On the connectivity front, India lags far behind China with about 40 million Internet users and 116 million telephone subscribers. However, I hear the word democracy can be used freely at Indian chat sites

 China possesses a better saving rate than India.

China has little political freedom but greater economic

freedom. India has political freedom but comparatively lesser economic freedom. China's national per capita national income has reached US$1,740 in comparison to US$ 950 of India. At 70th position, India rates low on the infrastructure sub index as compared to China, which is at the 53rd position

Weaknesses of China over India:

India has higher investment rate than China
India scores higher in the maturity of her financial institutions including banking, stock exchanges

and monetary system (Reserve Banking). The 4 richest people in India (Premji, The Ambanis, Sunil Mittal) are worth more than the top 40 richest Chinese. 150-200 million people in the middle class and close to 24% of the population below the poverty line.

 By mid-century, India is expected to have 1.6 billion

people - and 220 million more workers than China

According to various surveys, India is considered to

be more innovative than China. India scores over China in both the market opportunity and regulatory sub indices with 28th and 16th position respectively while the latter holds the 50th and 52nd position.

Thank You