Countering China: India’s long game with China and challenges posed by a ‘soft’ state

News: Chinese economy is more than five times of Indian size. Its defence capabilities are more than that of India. China is also eyeing global leadership in the field of IT, robotics, Artificial Intelligence etc. All these, place India at a great disadvantage. It is time that India should now act proactively for countering China.

On what parameters, India should work for countering China?

Rising young working-age population: China is currently facing a serious problem of ageing, while India has a rising share of the working-age population. To make use of it efficiently, India should productively employ its growing labour force. Employer survey indicates that only about 40% of the Indian workforce have the necessary skills to be productively employable.

Literacy: Free basic education is a legal entitlement in India, but learning outcomes reflects the failure of Indian education policies. For India to implement a high growth strategy like Japan, China and other countries, it needs to switch to an outcome-based oriented approach and integrate it with the skilling programme.

Reforms in policies: India has to shed its image of what Gunnar Myrdal called a soft state if it is to implement an East Asian development strategy. A large share of state revenue is spent on accommodating subsidies and transfers for competing special interests. As well as asserted by Thomas Piketty that India remains one of the most unequal countries in the world.

Regulatory Framework: India’s regulatory framework has led to the stunting of businesses. This has resulted in few very large enterprises coexisting with hundreds or thousands of small businesses.

Bureaucracy:  India’s bureaucracy is elitist, guided by lifetime job security at high salaries, and salary is not directly related to performance.

According to various stakeholders, India should exercise strategic patience and play a long game and should ensure a higher growth than China over the next 2-3 decades. For this, India could draw lessons from the growth story of China and other East Asian ‘miracle’ economies. It should also make full use of its certain parameters, which it has in a more advantageous position than of China.

India should take the right steps to leverage its demographic dividend to move onto a high growth path and to counter China in the coming times.

Source: This post is based on the article “India’s long game with China and challenges posed by a ‘soft’ state” published in the Livemint on 21st January 2022.