Is India's economy growing like China's?

If not, why? I realize it may not be a simple answer, but any information would be appreciated.

The last several years, India’s had growth rates comparable to China. The bottom of this page gives a chart for GDP growth for the last 28 years.

I can’t offer any specific information about why India is a bit slower than China, but I can hazard one guess based on the limited reading I’ve done, and that is: India is a democracy. Their development is encouraged, then hampered, by the tides of electoral fate. This is not necessarily a bad thing. The autocratic Chinese government can steamroll economic reforms without the hassle of complaints from its citizens, but this great governmental power also means that corruption can continue unabated without any large public outcry. A democracy is comparatively slower in implementing economic liberalization (in the classical sense of that word), but a democratic government is ultimately beholden to its people, which means mistakes can be corrected at the next election.

It’s possible, then, that India’s growth is somewhat slower but ultimately more stable.

In addition to what **Kendall **said, I think one of the major differences between India and China is that economic policy in China is applied to the entire country. India, by contrast, being a government of federated states, has various economic policies applied at the state level, some of which may be in conflict with the federal government’s policies. For example, the current federal (or Central) government is moderately left-wing socially, but is also trying to implement economic reform. Some states (notably West Bengal) are currently ruled by Communist governments that bitterly oppose deregulation and privatisation of government-owned corporations.

Whether India as a democracy has been more successful in combating corruption than China is, I think, open to debate. Corruption is unfortunately endemic in both countries, although over the last few years in India I get a sense that it is becoming less tolerated, and that reform, though painfully slow, will eventually reduce it further. Having no first-hand experience of China, I can’t comment on whether the same tendencies are also visible there.

I think that looking at the raw GDP numbers clearly shows that China’s growth rate is substantially ahead of India’s, and has been for several years now. As **Kendall **also noted, however, this may be slower but more stable growth. I have a sense that India won’t be hosting an Olympics any time soon, but will eventually transition to a more stable industrial society. This is, of course, just a hunch, and is naturally biased by being Indian. I’m open to being corrected on this point.

India’s road and general transportation infrastructure is leagues behind China’s. This makes (and will make) a large difference in sustainable growth over time.

One rather noteworthy difference is that approx 60% of all indians earn their living from agriculture accounting for 18% of GDP, versus about 45% of Chinese accounting for 11%. Indian agriculture is massively dependent on the monsoon - if it fails, hundreds of millions of subsistence farmers face starvation and the urban poor face price rises. If there is a good monsoon, then farmers earn a little bit of money and the urban population get cheaper food. So agriculture is only a small percentage of total GDP, but it’s rather erratic and has a disproportionate impact on the economy since it employs 600 million people and feeds the rest.
Personally, I think a lot of India’s recent economic sucess has been down to decent weather. If India can manage to get through a succession of two or three bad monsoons without having the stuffing knocked out of its economy, then I might start believing the whole ‘superpower’ hype. Until then it’s just a big poor country with 40% illiteracy, rampant malnutrition, and a thin smear of modernity over the top.

India has had to contend with, at any one time in the last little bit, 3 or 4 regional armed insurrections, including one in Kashmir receiving substantial backing from a major hostile power. Not to mention the occasional armed flareup with Pakistan directly. China essentially faces no military threats of any consequence either from within or abroad and has not since the late 1980s. China’s security situation is far better than India’s.

India also started it’s transition towards a market economy later than China, in the 1990s instead of the 1980s. I’ll note that the presence of a democratic government does not seem to have any real correlation with the popularity of a market economy. For a long time, Indians were apparently happy with their quasi-socialist economic policies while the other Asian tigers, ruled by authoritarian dictatorships of various levels of severity, were rapidly industrializing and embracing globalization.

India has advantages too. Obviously a democratic government will in the long run be able to deal with corruption more effectively. The other obvious one is the widespread use of English. None of the East Asian countries (Japan, China, Korea) have proven themselves even remotely competent in their efforts to teach second languages to their populations, and if the Japanese are any indication, the problem doesn’t seem to be lack of money or patience. I think Japan largely does not have a software industry with any foothold outside of the domestic market(No Japanese Microsoft or Oracle that I know of) simply because of the language barrier. India is already well ahead of it’s competitors in this regard.

I was privy to a discussion between a Chinese entrepreneur (running a small software company of approx 1200 people from Suzhou) and the (Indian) CIO of a decent-size financial firm. They were of the opinion that the biggest factor in the relative performance of India and China as regards software, services and outsourcing was simply that in China, smart people have any number of career choices available to them in manufacturing, logistics, finance, retail and so on. Until fairly recently Indians had very few options other than software and services - everything else was buried under a stifling heap of bureacracy. That means in India the best brains are packed into a very specific niche, whereas in China they are all over the place - so India leads in BPO and related services, whereas China leads in pretty much everything else.

As regards English-language, the biggest barrier seemed to be overcoming the fear of losing face by making mistakes. At least where young technically-educated programmers are concerned, ‘good enough’ English appears to be relatively common. After all, it’s not as though Indian outfits are renowned for the intelligibility of their English.

It is a little bizarre that the democratic country has had a more socialistic economy than the communist country.