Learning from China (On economic growth & development)

Source: Indian Express

Relevance: Agriculture reforms on the line of China are necessary to improve living standards

Synopsis: The focus of India’s economic policy has to be on quality education, skill development, and agriculture reforms. Lessons from China.

Context

Post independence we have achieved several milestones like, reducing poverty, improving literacy, increasing life expectancy etc. Green revolution also played an important role in achieving food security.

But, it is equally important to look after the failures as well. This can be done by evaluating how other nations have performed, especially those which started with a similar base or even worse conditions than us. If some countries have done better than us, we should not hesitate to learn from them.

Comparison with neighbours

• Pakistan – independent India has done better than Pakistan if measured on a per capita income basis.
• Bangladesh – its per capita income is marginally higher than India
• China – Though started at a similar position, China is much ahead of India both in terms of GDP and per capita income.

The real comparison of India should be with China, given the size of population of the two countries and the fact that both countries started their journey in the late 1940s.

Reason behind China’s progress

China started changing track to more market-oriented policies, beginning with agriculture, from 1977.

• It introduced the Household Responsibility System and liberation of agri-markets which led to an annual average agri-GDP growth of 7.1% during 1978-1984. This led to increase in farmer’s real income, giving scope for introduction of more agricultural reforms.
• It also created a huge demand for manufactured products, triggering a manufacturing revolution in China’s town and village enterprises.

Suggestions for India

• Liberating agri-markets– China’s reforms started with agriculture, and India till date had been avoiding agriculture reforms.
• Increasing purchasing power of people: For manufacturing to grow on a sustainable basis, we have to increase the purchasing power of people in rural areas by raising their productivity and not by distributing freebies. It requires investments in education, skills, health and physical infrastructure both by the government as well as by the private sector
• Population control- China adopted the one-child norm from 1979-2015. As a result, its per capita income grew much faster. India’s attempts to control its population succeeded only partially and very slowly. Poor education, especially that of the girl child, is at the core of this failure.