Chapter 10 Comparative Development Experiences of India and its Neighbours

10.1 Introduction

In an increasingly globalized world, understanding the development strategies of neighboring countries is crucial. Developing nations, in particular, compete in a limited global economic space, making it essential to learn from each other's strengths and weaknesses. This process is facilitated by the formation of regional and global economic blocs like SAARC, ASEAN, BRICS, and G-20.

This chapter provides a comparative analysis of the developmental experiences of India and its two most significant neighbors: Pakistan and China. This comparison is particularly interesting because, despite sharing a geographical region and vast natural resources, their political systems are fundamentally different:

• India: The world's largest democracy with a secular and liberal constitution.
• China: A command economy under single-party rule, which has recently moved towards economic liberalization.
• Pakistan: A nation that has experienced long periods of militarist political power.

Understanding their diverse paths helps to contextualize India's own development journey and the shared environmental and human development challenges in the region.

10.2 Developmental Path—A Snapshot View

India, Pakistan, and China embarked on their developmental journeys at roughly the same time and initially adopted similar strategies.

Similar Starting Points:

• India and Pakistan gained independence in 1947.
• The People's Republic of China was established in 1949.
• All three countries relied on Five-Year Plans for development. India launched its first plan in 1951, China in 1953, and Pakistan in 1956.
• All three emphasized a strong public sector and invested heavily in social development.
• Until the 1980s, their growth rates and per capita incomes were quite similar.

Distinct Paths of Development:

China:

• After 1949, China brought all critical sectors of the economy under government control.
• Great Leap Forward (GLF) (1958): This campaign aimed for massive industrialization. People were encouraged to set up backyard industries. It introduced the Commune system, where people collectively cultivated land. The GLF was a failure, compounded by a severe drought that killed about 30 million people and the withdrawal of Russian professionals.
• Great Proletarian Cultural Revolution (1966–76): Introduced by Mao Zedong, this period saw students and professionals being sent to the countryside to learn from the masses.
• Economic Reforms (1978): China's modern industrial growth is traced back to these reforms, which were introduced in phases:
  1. Initial Phase: Focused on agriculture, foreign trade, and investment. Commune lands were allocated to individual households for cultivation, who could keep the income after paying taxes.
  2. Later Phase: Focused on the industrial sector. Private firms and Township and Village Enterprises (TVEs) were allowed to produce goods. State-Owned Enterprises (SOEs) were made to face competition. A system of dual pricing was introduced, and Special Economic Zones (SEZs) were set up to attract foreign investment.

Pakistan:

• Followed a mixed economy model similar to India.
• 1950s-60s: Pursued an import-substitution industrialization strategy, protecting domestic consumer goods industries with tariffs and import controls.
• The Green Revolution led to increased food grain production and changed the agrarian structure.
• 1970s: A period of nationalization of capital goods industries.
• Late 1970s-80s: A policy shift towards denationalization and encouragement of the private sector. The economy was boosted by financial support from Western nations and large remittances from Pakistani workers in the Middle East.
• Economic Reforms (1988): Structural reforms were initiated.

10.3 Demographic Indicators

China and India are the world's two most populous countries, while Pakistan's population is significantly smaller. A comparison of their demographic indicators reveals key differences in their development stories.

Analysis of Demographic Data:

• Population Growth: Pakistan has the highest population growth rate, while China's is the lowest. China's low growth is a direct result of its strict 'one-child norm' introduced in the late 1970s.
• Sex Ratio: All three countries have a low sex ratio, indicating a strong societal preference for male children ('son preference').
• One-Child Policy's Impact: Besides controlling population, this policy in China has led to a skewed sex ratio and is projected to result in an aging population, with a higher proportion of elderly people compared to young people in the coming decades. This has prompted China to relax the policy.
• Fertility Rate: China has the lowest fertility rate, while Pakistan's is very high.
• Urbanisation: China is the most urbanized of the three, with nearly 60% of its population living in urban areas.

10.4 Gross Domestic Product And Sectors

China's economic growth has been a major global story. It has the world's second-largest GDP (in PPP terms), significantly larger than that of India and Pakistan.

GDP Growth Rate Comparison:

In the 1980s, China experienced near double-digit growth, while Pakistan grew faster than India. By 2015-17, India's growth rate had moderately increased, while those of China and Pakistan had declined. Pakistan's slowdown is often attributed to political instability and its reliance on foreign aid and remittances.

Sectoral Contribution to GVA and Workforce (2018–2019):

Analysis of Sectoral Data:

• China's Classic Shift: China has followed a traditional development path, with its workforce and output shifting progressively from agriculture to industry, and now towards services. Its industrial sector is a major contributor to both GVA and employment.
• India and Pakistan's Leapfrogging: In both India and Pakistan, the workforce has shifted directly from agriculture to the service sector, bypassing a strong industrialization phase. The service sector is the largest contributor to GVA in all three countries.
• While the share of the workforce in agriculture has declined in all three countries over the past few decades, it remains the primary source of employment, especially in India.
• India's economic growth is largely driven by the service sector, whereas China's growth has been fueled by both its manufacturing and service sectors.

Work These Out

For sustainable and broad-based development, both India and Pakistan need to strengthen their manufacturing sectors. An over-reliance on the service sector can be risky, as manufacturing creates a wide range of jobs for different skill levels and has strong backward and forward linkages with other sectors of the economy. A robust industrial base is essential for absorbing the surplus labor from agriculture and ensuring long-term, stable growth.

10.5 Indicators Of Human Development

A comparison of human development indicators reveals that China has significantly outperformed India and Pakistan.

Key Observations:

• China's Lead: China is far ahead of India and Pakistan in nearly all indicators, including income (GNI per capita), life expectancy, literacy, and health outcomes like maternal and infant mortality.
• Poverty: India has the largest share of people living below the international poverty line of $3.20 a day.
• Maternal Mortality: Both India and Pakistan have alarmingly high rates of maternal mortality compared to China.
• Malnourishment: India and Pakistan both struggle with high rates of undernourishment among children.
• Sanitation: Pakistan has shown better performance in providing access to basic sanitation compared to India.

The Liberty Indicator:

While Human Development Indicators (HDIs) are crucial, they are not sufficient. They do not capture what are known as 'liberty indicators'. These would include measures of democratic participation, constitutional protection of citizen rights, and judicial independence. The absence of such indicators in the HDI framework makes it an incomplete measure of human well-being and limits its usefulness, especially when comparing countries with vastly different political systems like India and China.

10.6 Development Strategies — An Appraisal

Understanding the reasons behind the varied economic performance of these nations requires looking at their reform strategies and pre-reform conditions.

China's Success:

• Self-Initiated Reforms: Unlike India and Pakistan, which introduced reforms under pressure from the World Bank and IMF, China's 1978 reforms were self-initiated. The leadership was dissatisfied with the slow growth under Maoist policies.
• Strong Pre-Reform Foundation: China's success was not solely due to the reforms. The pre-reform period had established a strong foundation in:
  • Health and Education: Massive extension of basic health and education services in rural areas created a healthy and literate workforce.
  • Land Reforms: The commune system, despite its flaws, ensured a more equitable distribution of food grains and laid the groundwork for agricultural reforms.
• Phased and Experimental Approach: Reforms were first tested at a smaller, local level before being implemented on a national scale. This allowed the government to assess their impact and costs, ensuring a smoother transition. For example, the success of agricultural reforms created prosperity and a strong support base for further industrial reforms.

Pakistan's Challenges:

• Worsening Indicators: Pakistan's reform process has been associated with a slowdown in growth and a re-emergence of poverty.
• Structural Weaknesses: Scholars attribute this to several factors:
  • Volatile Agriculture: Economic performance was heavily dependent on good harvests rather than on institutionalized technological change.
  • Dependence on Remittances and Aid: Foreign exchange earnings were reliant on volatile sources like remittances from workers in the Middle East and foreign loans, rather than on sustainable manufactured exports.
  • Political Instability: Long periods of political turmoil have hampered consistent economic policymaking.
• Recent Recovery: In the last few years, Pakistan has shown signs of economic recovery, with its GDP growth picking up, driven by the industrial and service sectors.

10.7 Conclusion

The developmental journeys of India, China, and Pakistan offer valuable lessons. After starting at similar levels of low development, the last few decades have seen them diverge significantly.

• India has achieved moderate economic performance within a democratic framework, but still faces immense challenges. A majority of its population depends on agriculture, infrastructure is inadequate, and over a quarter of its people live in poverty.
• Pakistan's growth has been hampered by political instability and over-dependence on foreign aid and remittances, although recent signs of economic recovery are visible.
• China has achieved remarkable success by using a unique model of a 'market system without losing political commitment'. It leveraged its pre-reform social infrastructure (in health and education) to fuel rapid growth and poverty alleviation. Unlike India and Pakistan, China did not privatize its public enterprises but used the market to create additional social and economic opportunities, while retaining collective ownership of land to ensure social security in rural areas.

The lack of political freedom and human rights in China remains a major concern, but its economic strategy provides important lessons for the developing world.

Recap

This section provides a summary of the key comparative points from the chapter. It highlights the similar starting points but different political systems of India, China, and Pakistan. It revisits their planning strategies, the timing of their economic reforms, and the different impacts these had on population growth, GDP growth, and sectoral shifts. It summarizes China's lead in industrial growth and human development indicators, which is attributed to its strong pre-reform social infrastructure. Finally, it reinforces the importance of considering 'liberty indicators' for a complete assessment.

Exercises

This section includes a series of questions for self-assessment, designed to test the learner's understanding of the concepts discussed in the chapter, such as the rationale for economic groupings, the developmental strategies of China and Pakistan, the implications of the 'one-child norm', and a comparative evaluation of the three countries based on economic and human development indicators.

Suggested Additional Activities

This section provides ideas for projects and classroom debates to deepen the understanding of the chapter's themes, such as discussing the pros and cons of free trade with China and Pakistan, the feasibility of a 'one-child norm' in India, and China's performance on Human Development Indicators.

References

This section lists academic books, articles, government reports, and websites that serve as sources for the chapter and provide avenues for further reading on the comparative development of India, China, and Pakistan.