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Why is India less developed than China?

It is said that the 21st century is the era of India, but its financial results are inferior to those of China.

Data shows the per capita purchasing power parity gross domestic product (GDP) (2017 dollar price) compared to India and neighboring countries, Indonesia and China. The International Monetary Fund (IMF) has data since 1980, but Deng Xiaoping adopted the reform and open route in 1978.

In 1980, China was the poorest of these countries, but it developed quickly. In 1980, China was poorer than India and Bangladesh, which was said to be the poorest country in Asia. 

Until the early 1980s, China and India were socialist countries with planned economies, trade not liberalized, foreign investment not flowing in, and infrastructure investment delayed.

However, while China advanced all at once in the 1980s, India seemed to be delayed even in the 1990s. China is far ahead of Pakistan, Indonesia, and Sri Lanka.

An astonishing growth rate is shown in China.

China's growth rate every ten years from 1980 to 2022 shows exceptionally high growth. India also grew at an average annual rate of 4.4% in 42 years per capita, while China grew astoundingly at 8.1%.

It means China has shown alarming growth rates rather than India's inferiority. Sri Lanka has 3.8%, Indonesia has 3.5%, Bangladesh has 3.3%, and Pakistan has 2.1%. Bangladesh is a notable country. The growth rate is gradually increasing, and 2010-22 is the second-highest growth after China.

Looking at purchasing power parity GDP per capita, China was only $ 674 in 1980, but it was $ 3,431 in 2000 and $ 18,299 in 2010. On the other hand, India was overtaken by $ 2361 in 2000 and $ 7,159 in 2010, compared to $ 1210 in 1980. India's GDP per capita is less than one-2.5th that of China.

　Is there any way for India to increase its growth rate even a little? I'm not confident this is correct, but it could be managed by lowering population growth, increasing investment, and strengthening the manufacturing supply chain.

There is also the aspect that the population slows down the growth rate.　

In Japan, there was a lot of debate that people couldn't grow because the population didn't increase, but before the war, there were a lot of discussions that they couldn't get rich because of the excess population. Before the war, Ikki Kita's "Japan Remodeling Bill Outline" (1923) stated, "Japan is forced to double its territory in 50 years and to support at least. 

China, Sri Lanka, Indonesia, India, Bangladesh, and Pakistan are divided into three groups. 

From 1980 to 2022, China's population growth rate was 0.9%, while India's population growth rate was 1.7%. The lower the population growth rate, the more prosperous the economy at a lower economic growth rate.

Is it possible to achieve a high growth rate if the increased investment rate?

　The second is the high investment rate of China (total fixed capital formation ÷ GDP). Generally speaking, the more investment you make, the higher the growth rate. Figure 3 shows the investment rates of India and China. While China's investment rate is over 40%, Indonesia has declined since 1990, and India and Sri Lanka have been around 25-30%.

　Here, the investment rate in Bangladesh should be growing steadily. Since the investment rate is steadily increasing, the growth rate is rising. Pakistan is only about 15%.

However, it can be wasteful if you invest too much. China is growing at 7%, with an investment rate of over 40%. 

India is only increasing 5%, with an investment rate of over 30%. 

Bangladesh is growing at 6% with a 30% investment rate. 

India may have something to learn from Bangladesh.


What do you need to rebuild the manufacturing industry?

The third is how to reconstruct the Indian manufacturing industry. Prime Minister Modi is trying to increase his competitiveness by distributing subsidies to the manufacturing industry. But what is needed is not subsidies but efficiency.

　China is creating more new products than subsidies. If you don't use donations in the first place, you should be able to reduce costs even more.

　China's growth potential is astounding. I overtook India in no time. However, this may not be the characteristic socialist power of China.

　China's income level is $ 19,000, which is still less than half that of Taiwan's $ 50,000.

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