Only one new Giant for now?A PIECE OF MY MINDShankar Acharya / New DelhiJanuary 25, 2007The author on his second visit to Beijing had a definitive impression that while China , in terms of Per Capita Income is double India , Beijing is at least thrice New Delhi .
He contrasted both the infrastructural lag of the Capital city of India behind Beijing and the level of self esteem manifested in look and attire of the common people of the two cities . From this ambivalence of feelings about the visual appearance of the two cities the author gives a prelude to the would-be findings of the conference on the
impact of India and China on the global
economy .
India’s
growth over the last quarter of the last century is no doubt commendable with a sustained 6 % annual
figure . However , the slow pace of globalisation in India in contrast to China’s vigorous intergration with the world economy especially after enterng WTO in 2001 , renders it fallacious to take the two
countries for a comparative study on their impact on world economy . During the period from 2000 to 2005 witness what shows the stark difference between the quantum of impact exerted by the two countries on the world economy by dint of their
export and import of products and services , inflow of FDI and consumption of energy . During this period while China’s goods export increased from $249 bllion to $762 billion showing a increment of $513 , India’s goods export rose from $46 to $105 . Thus , the increment figure for China stood 5 times the annual absolute figure of India in the year 2005 .Similarly India’s share in world export stood at a negligible 0.9% in the year 2005 while China’s share was 7.3% in the same year . The increment in inward FDI flows into China was seven times total FDI inflow into India in 2005. Similarly, the increase in oil consumption during this period in China was almost equal to India’s total oil consumption in 2005. Apart from the pace of globalisation there are other factors for the more dramatic impact of China on the world economy compared to India’s . First, China has been enjoying a rate of per capita income growth double that of India during the last 25 years . China’s growth is propelled more by the growth in external demand for China’s goods while India’s growth is driven more by domestic consumption . Similarly , another important factor for China’s dramatic growth is its labor intensive manufacturing
sector .In the year 2004 the manufacturing sector’s share in the GDP was 14% in case of India and 40% in case China .While India is a rapid growth story in case of Software export , in terms of total service exports in 2005 China exceeded India’s figure even there . Even the picture of India’s software sector which employs a moderate 1.3 million people and IT/ITES sub sector which contributes only 3 % of GDP is not expected to transform India into somebody impacting much the world economy . Above all this sector is being dogged by scarcity of quality manpower , rising competition and anti outsourcing sentiment in importing countries .In view of the above facts and figures and in absence of any miraculous happenings in Indian and political and economic upheavals in either of the two countries in site , it is fair to conclude that India is going to lag by 10 to 15 years behind China and that despite a sustained slower growth of India , there is only one giant in view i.e, China .
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