On Tuesday, a policy paper was released which stated that the difference in GDP between the two countries is much large. But there are certain possibilities for India to achieve rapid growth over the next 20 years.
Ways in Which “India Can Rise to The China Challenge”
There are various factors in India‘s favor for which it can rise to the China challenge. The policy paper stated that the first favor includes demography with “the outlook for the working-age population which is superior to that of China, where the one-child policy of 1979-2015 coerced households into a premature ‘baby bust’”. The second factor is that “the financial system of India allocates capital better than the financial system of China. This gives India an edge in translating the flow of investment into increased GDP and thus reduces the consequences of the gap between investment in India vs. investment in China”. The third factor is that the “Chinese exports are fragile to the extent to which they have been led by state interventions, the extent to which they are shaped by distortions in finance, exchange rates, and subsidies. This raises questions about the sustainability of the level and the growth”.
Factors on which India Needs to Refocus
The report says that India needs to refocus on “domestic policy flaws which have held India back, and in finding the energy and intellectual capacity to address them”. If India addresses the domestic flaws well, then it is sure that over the next 20 years, it will achieve extreme growth. Even the country should focus on creating acceptability for Indian goods and services.
TPT Policy Advocacy & Recommendations
- India must think at a strategic level to build the country into an advanced economy. It should focus on the ways that how the growth rate can be increased in the next 20 years.
- If the Indian households and corporate sector are encouraged by the abolition of income tax, then India can overtake China easily.