Coming soon: Elephant meets dragon India to match Chinas economic growth by 2020, Pranab Bardhan

Thiruvanathapuram, July 15 India, dubbed as the `elephant among the world economies would catch up with its big brother and neighbor Peoples Republic of China in terms of economic growth by the turn of this decade, noted economist Pranab Bardhan said here today. According to him, several factors including Indias relatively young working population thanks to the demographic shift aiding all round productivity would be one of the key factors help the country achieve this target. Prof Bardhan, Professor, at the University of California was delivering the third BG Kumar memorial lecture at packed auditorium at the Centre for Development Studies in Prasanthnagar in the outskirts of Thiruvananthapuram on Friday. Centre director Pulapre Balakrishnan welcomed the gathering. A potential advantage India has over China in speeding up its economic growth is the demographic shift in favour young and able working population. This would put India in a higher growth trajectory and the country could catch up with the economic growth of China by 2020, Prof Bardhan said. He also said that the world two largest most populous economies would garner a lion share of the world output and income surpassing the now developed countries such as the United States and Japan. In 1820, India and China together had a combined economic size of 39% (China 36% and India 16%). However, this had declined to a mere 9% of the world economy by 1954. But, according to the current estimates the combined size of Indias and Chinas economy by the year 2025 would be 36%, he pointed out. He also sought to debunk several popular myths surrounding Chinas economic growth. Contrary to popular notion, the Chinese economic growth was more of a function of growth in domestic economy than driven by external demand manifested in exports. This, according to him, was evident from the high incident of value addition in Chinese products. Exports, according to him had played a critical role in Chinese economic development; but domestic consumption is one of the key factors that spurred the Chinese economic miracle. More than the global environment, it was the domestic policy changes and initiatives that helped China achieve a higher growth trajectory, Prof

Bardhan has said. China had a head start over of India for relatively better equitable distribution of income while wealth in India concentrated in a few hands and highly skewed. China had transferred itself from a Communist economy to a household incomebased economy. This had helped the country a sort of relative income equality, improve standard of education as well as healthcare. This has gone a long way in helping China achieve higher economic and social development, he added. In equality in terms of consumption though declined over the years Prof. Bardhan argued that inequality in land ownership, education, and social status all these three he dubbed as `inequality in opportunities is beyond explanation. Dubbing Chinas current state as a crony capitalism, he said wide spread land grab for various `development purposes by local officials are leading to `capitalist excess and its attendant corruptions.. Another salient factor that spurred the overall growth in China is the key role played by the township and village industries under the control of local officials, who enjoyed much autonomy. While the performance of these industries served as an incentive for the upward or downward mobility, Prof Bardhan felt, India should take a leaf out of this Chinese lesson to evolve a system of reward and punishment for the performers and laggards among the Indian bureaucracy.