It is said that economic agents have greater confidence in the systemic stability of democracies despite overt manifestations of political instability. Analyse why based on a comparison between India and China‘s economies and how it has impacted their growth stories. (200 Words)
China’s economic policy of ―state capitalism(SC), which was adopted after reforms were introduced in 1979 has, over the decades, emerged as the ideal economic development strategy due to the high growth levels China has been able to maintain over the past three decades. This strategy has even been considered superior to the one outlined in the ―Washington consensus, especially after the South-East Asian economic meltdown of 1996.
India’s economic growth and social welfare programmes, on the other hand, have been overshadowed by that of China‘s. Also, India lags far behind China in the exports sector and the volume of FDI inflow. Policy implementation in India is also slower than China’s as was evident in the differences observed in the organization of the Beijing Olympics and the Commonwealth games.
However, there are certain aspects of our economic strategy which is superior to that of China’s. Chinese growth is too dependent on exports and investments, while domestic consumption is the primary growth-driver in India’s case, making it less susceptible to shocks from the International economy. The greater freedom accorded to Indian companies and the lower level of bad loans among Indian banks, compared to that of China’s, are other positives of our economy.
The biggest advantage which India has over China is the vibrant democratic system of the country, which has proved to the world that an authoritarian regime is not necessary for robust economic growth. Our strong democratic credentials also give more confidence to foreign investors, even though China has a larger market size. Leveraging these advantages to ensure a sustainable economic growth of India is the way forward for the country.
Critically compare and contrast foreign policies of India and China, especially with respect to meeting their security, strategic and economic needs. (200 Words)
Since independence India has adopted a foreign policy based on principles such as:
- Non-alignment: remaining away from any military blocs; independent opinion at global forum.
- Panchsheel: based on mutual peaceful coexistence.
- Gujral doctrine: magnanimity with our neighbours;
- No first nuclear strike:
In this way India has gained a lot of trust & respect from global community; translating into immense softpower which we yield in almost world over; on flip side we are seen as a nation lacking teeth & muscle.
On the other hand China has adopted a foreign policy based on objectives such as
- One China policy: A nation cannot have official relations with China & Taiwan both.
- MSR & SREB initiatives: focus on infrastructure development in countries of Central Asia, Africa, and Indian Ocean region; to gain strategic leverage in the region.
This way China has risen from status of a third world country to become a major player on global arena; but it is viewed with suspicion by global community; often seen as an aggressive & assertive nation:
- Security: focus on investments in Tibet & Xinjiang; hub of ethnic violence; this will promote industry & infrastructure; to generate employment; curbing secessionist tendencies; but India has failed to ensure development in LWE areas by any means.
- Strategic interests: China has encircled India through mega infrastructure projects; on land via SREB initiatives & sea via MSR initiatives; CPEC in Karakoram; India lacks vision in this matter & has only reacted to string of pearls by speaking about naval modernization & through meagre measures such as Chhabar port in Iran; currently we are seeking alliance with countries such as Vietnam & Japan which seems a right step.
- Economic needs: after sustained double digit growth China plans to cool off its overheated economy through an investment (funding infra needs of other countries) led growth; this will keep inflation checked; for India inflation remains a headache; record of sustained growth in comparison to China remains poor.
Chinese policy is enriched by a vision & pragmatism which seems non-existent in Indian policy; India can emulate China as an example.