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Indian Economy: What is going wrong?


In the last three years, the Narendra Modi government has never missed a chance to emphasize and swim over the fact that India has surpassed China as the world’s fastest-growing and a large economy. Even the likes of big institutions in Bretton Woods institutions and western capitals too have regularly undermined this regular statements by the Modi government.  As per the latest facts and figures, the Indian economy is growing annually at a stable rate of 7.1 percent, while on the other hand, the Chinese economy’s growth has taken a dip to 6.7 percent.

That has encouraged Hindu nationalist forces to project India as an alternate global power vis-à-vis China. India’s advocative commentators also have a huge hand in regularly provoking the government in order to adopt a horrendous approach against China for us to abandon the working bilateral relationship, which the neighbours have developed and is seeing a steady growth since early 1980s.

Those hawkish people completely outclass the fact and prefer to forget China’s extreme and profound military superiority whilst India’s military expenditure in 2016 was a mere $55.9 billion, China did spend a huge amount nearly equalling 4 times to the Indian expense on its military development. If the stats are to be honored, China reportedly spent a massive $215 billion, which is undoubtedly nearly four times more.

Despite the facts of the Indian economy taking an exponential rise in growing faster than China, it surely does not mean that the Indian subcontinent has become an economic powerhouse to be compared against the likes of a powerful country as China. While India’s Gross Domestic Product (GDP) was $2.5 trillion in 2016, people forget that China’s GDP is nearly five times of that, i.e. at $11.4 trillion.

That also reflects in the per capita GDP. While the numbers for India are $1,718, the Chinese numbers are way more superior standing at a massive $8,260.

India might overtake China in terms of population by 2022, but in order to overtake the superpower in its per capita GDP, the Indian economy surely needs an alarming rise in its growth and need to get it more than 30 percent annually.

Or else, at this rate, it will take more than a century to match China’s huge success. But looking at the current scenario, the Indian economy will certainly need that amount of time to at least equal China’s rate.

But as of now, the trend of comparing the Indian economy with that of Chinese economy has become almost a past time for many. China has made great efforts in transforming itself from an outdated centrally-planned and closed economy of the ’70s to become the world’s factory in the 21st century.

The main base of this rise dates back to the economic surge of authoritarian China in the post-1978 era which on the contrary had posed a stark contrast to the near financial bankruptcy of the Indian democracy in the early ’90s, a time until which China had already strengthened its grips in the economy sector.

This all cases ended up only to support the fact, the ill-informed thesis that it is easier to achieve economic growth in a top-down command economy like China than a rather messy and so called democratic system like India, one of the worlds most corrupted economies.

But looking at India’s drastic and impressive economic growth with the arrival of this century did certainly result in a huge transformation of not only the Indian economy, but also the balance of power between India and China in the tenor of the debate as India is slowly covering the grounds to decreasing the gap between China and themselves.

China and India were the most talked about points of subject in the same breath as one of the two most fastest-growing economies in the world, who would be increasingly playing a larger role in global markets and making their presence felt simultaneously.

There is no clear consensus on the causal relationship between democracy and economic development. There is a never-ending debate over whether economic development comes before democratisation or vice-versa.

Several impoverished countries like Chile, Singapore, Taiwan, Malaysia, Thailand and South Korea have managed in achieving a steady and rapid economic growth under authoritarian regimes.

At the same time, there also seem to be several other autocrats who have seemingly brought about economic miseries to their doorsteps; the Congo under Mobutu, Zimbabwe under Mugabe, North Korea under Kim Jong II, and the Philippines under Marcos.

Most of the rich countries in the West are kinda pre-developed democracies, since the times they use to thrive upon the Indian economy during their reign over India.

At the same time, there seem to be some known democracies that have paid the price for their foolishness and irresponsible macroeconomic policies, the policies used by the several of the known elites of their country, that includes Columbia, Sri Lanka and Indonesia.

Such facts urge us to stop debating whether a democracy or autocracy or dictatorship are good for a country to establish a steady and improving growth.

What is indeed necessary for any economy to flourish is the staunch requirement for enabling internal as well as external security environment.

This is what has probably helped as China did the same since 1978, which attracted India to follow China’s footsteps in this century while planting the liberal economic policy, the ruling establishment provided a fertile ground for it to take root and bear the fruits.

A country’s economic will certainly fail to grow when it is suffering from internal instability and engaged in even any small form of hostility with its key neighbours.

In spite of numerous small but key territorial disputes with its neighbours, China has kept their arms to themselves and have succeeded in not getting caught up in fighting a war since March 1979.

Till the late 2008, the Chinese also kept themselves from potentially projecting themselves as a threatening challenger to the US in terms global politics. Talking about any internal protests seen on the Chinese lands, we would have to date back to the Tiananmen Square Protests of 1989 which were the last major challenge to the development in the country.

This made the former prime ministers Atal Bihari Vajpayee and Manmohan Singh both realise the critical and urgent importance of some peaceful and stable neighbourhood for it to succeed on the economic front at home.

That was the main reason behind Vajpayee travelling to Lahore in 1999 in order to welcome Pakistan with open arms and build up a good relationship with them which is seemingly impossible at the moment.

Even though Pakistanis were the main reason behind the Mumbai tragedy, that did not deter Manmohan Singh from continuing to pursue the dialogue process with Pakistan in order to give them a last chance.

In spite of tremendous American pressure, Manmohan Sigh clearly continued to refuse to sign LEMOA in order to maintain a a friendly and professional working friendship with China.

Both relative peace in the region and socio-political stability within the country helped the Indian economy to grow.

India has failed to witness any large-scale communal riots since 2002.

In 2006, Manmohan Singh’s statement that minorities must have the first claim on resources to share equitably the fruits of development was primarily directed at buying peace with the country’s then increasingly restless Muslim minority.

This led to increasing Maoist threat to the Prime Minister’s life but that did not hold him back and he consistently continued to emphasise the need for development and never adopted the law-and-order approach alone to address this challenge.

This internal and external stability seemed to be the key for India’s economy and it had taken the advantage of such regional peace and internal stability approx for nearly one-and-half decade, and established itself to a level where it was compared with the likes of China.

However, Narendra Modi’s hyper-nationalist ideology has forced India to adopt a confrontational politics vis-a-vis Pakistan and China for the last two years.

The regular war cries against Pakistan and even China have become common due to political opportunism, which has seriously destabilised regional peace.

At the same time, Hindutva politics has brought over further dents in India’s stratified society. India’s minorities have been pushed to the edge of the cliff, especially the 180 million-strong Muslim nationals of India.

Modi’s politics has not only alienated the majority of the minority communities, but also sidelined the caste groups, mainly the Dalits. India has never seemed as unstable internally as it is today.

It can be totally foolish to expect India to match China at least in the future on the economic front considering the current regime adopted by the Indian leader that has thrown the Indian democracy into a socio-political quagmire, making it very difficult for the Indian economy to stand tall to China in near future

On one hand Narendra Modi is talking about development and economic growth, the other side sees a stand being provided alongside the space and opportunity to pseudo-nationalists and Hindutva thugs to create an entirely new environment full of hindrances both internally as well as regionally.

If the Indian nation has to compete in the following era in terms of economy, it needs to get rid of the so called ultra-nationalist and majoritarian path and needs to give equal significance to the lower minorities as well if it is to achieve a stable and economic growth in order to surpass China.

Considering India’s social and geographical peculiarities, for maintaining social and political peace and stability, it must follow a policy of equity, inclusivity and diversity at home and look forward to taking steps that would not only benefit the Indian democracy but would also boost the peace making steps with China and its other key neighbours simultaneously maintaining good ties with the World’s superpowers.



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