COMPARATIVE DEVELOPMENT EXPERIENCE OF INDIA

AND ITS NEIGHBOURS

Introduction
In the post cold war world, nations have been primarily trying to adopt various means which will
strengthen their own domestic economies. To this effect, they are forming regional and economic
groupings such as the SAARC, ASEAN, European Union, G-8, G-20 etc.

SAARC: (South Asian Association for Regional Cooperation): It is an

association of eight countries of South Asia – Afghanistan, Bangladesh, Bhutan, India, Maldives,
Nepal, Pakistan, and Sri Lanka. SAARC provides a platform for the people of South Asia to work
together in a spirit of friendship, trust and understanding. It aims to accelerate the process of
economic and social development in member countries.

ASEAN (The Association of South-east Asian Nation): It is a political, economic

and cultural organisation of countries located in South-east Asia- Thailand, Indonesia, Malaysia,
Singapore, The Philippines, Brunei, Darussalam, Cambodia, Laos, Myanmar and Vietnam.

European Union: It is a union of twenty-five independent states founded to enhance political,

economic and social cooperation within the European Continent.

G-8: The Group of eight consists of Canada, France, Germany, Italy, Japan, The United Kingdom of
Great Britain and Northern Ireland, USA, and Russian Federation. The hallmark of G-8 is an annual
economic and political summit meeting of the heads of government and international officials, though
there are numerous subsidiary meeting and policy research. The presidency of the group rotates every
year.

G-20: Group of developing countries established to focus on issues relating to trade and agriculture
in the WTO.

Development path of India China and Pakistan:

India China and Pakistan have many similarities in their development strategies.

(a) All the three nations started their developmental path at the same time.
(b) India and Pakistan got independence in 1947 and People’s republic of China was established
in 1949
(c) All the three countries had started planning their development strategies in similar ways.
While India announces its first Five Year Plan for 1951-56, Pakistan announced its first Five
 Year Plan, called, the Medium Term Plan, in 1956, China announced its first Five Year Plan in
1953.
(d) India and Pakistan adopted similar strategies such as creating a large public sector and raising
public expenditure on social development.
(e) All the three countries had similar growth rates and per capita income till the 1980s.

CHINA:
People’s Republic of China was established in 1949. After the establishment of People’s Republic of
China under one party rule, all the critical sectors of the economy, enterprises and lands owned and
operated by individual, were brought under government control.

1. Great Leap Forward (GLF) Campaign: The GLF campaign initiated in1958
aimed at industrialising the country on a large scale. People were encouraged to set up
industries in their backyards.

2. Commune System: In rural areas, communes were started. Under the commune system
people collectively cultivated lands.

3. Great Proletarian Cultural Revolution: In 1965 Mao introduced the Great

Proletarian Cultural Revolution (1966-76), under which students and professionals were sent
to work from and learn from the countryside.

4. Reforms introduced In China: China introduced reforms in 1978 in phases.

(a) In the initial phase reforms were introduced in agriculture foreign trade and investment
sectors. In agriculture, for instance, commune lands were divided into small plots which
were allocated (only for use and not as ownership) to individual households. They were
allowed to keep all income from land after paying taxes.
(b) In the later phase reforms were initiated in the industrial sector. Private sector firms, in
general, and township and village enterprises (enterprises which were owned and
operated by local collectives) in particular, were allowed to produce goods. At this stage
enterprises owned by state (known as State Owned Enterprises – SOEs) were made to
face competition.

5. Dual Pricing Reform Process: The reform process involved dual pricing. This
means fixing the prices in two ways:
(a) Farmers and industrial units were required to buy and sell fixed quantities of inputs and
outputs on the basis of prices fixed by the government.
(b) For other transactions, the inputs and outputs were purchased and sold at market prices.

6. Special Economic Zone (SEZ): In order to attract foreign investors, SEZ were set
 up.
PAKISTAN:
1. Mixed Economic System: Pakistan follows the mixed economy model with co-
existence of public and private sector.

2. Introduction of Various Regulatory Policies: In the late 1950s and 1960s

Pakistan introduced various regulatory policies (for import substitution industrialisation). The
policy combined tariff protection for manufacturing of consumer goods together with direct
import controls on competing imports.

3. Green Revolution: The introduction of green revolution led to mechanisation and

increase in public investment in select areas. It led to increase in the production of food
grains. This changed the agrarian structure dramatically.

4. Nationalisation of Capital Goods Industries: In the 1970’s nationalisation of

capital Goods Industries took place

5. Encouragement to Private Sector in the late 1970s and 1980s: In the late
1970s and 1980s. Pakistan adopted the policy of denationalisation. Government encouraged
the private sector and also offered various incentives to them. All this created a conductive
climate for new investment.

6. Financial Support during late 1970s and 1980s: Pakistan received financial
support from:
(a) Western nations
(b) Remittances from emigrants to the Middle East.
This helped the country in stimulating economic growth.

7. Reforms: In 1988, reforms were initiated in the country.

 COMPARATIVE PERFORMANCE OF THE ECONOMIES OF INDIA,
PAKISTAN AND CHINA
A) Demographic Indicators
Selected Demographic Indicators, 2017 – 18
Country Estimated Annual Density Sex Ratio Fertility Urbanisation
Population Growth Rate (per sq. km) (2015) Rate (2015)
(in millions) of Population (2015)
(2015) (2015)
India 1352 1.03% 455 924 2.2% 34
China 1393 0.46% 148 949 1.7% 59
Pakistan 212 2.05% 275 943 3.6% 37
Source: World Development Indicators 2019, www.worldbank.org
(From NCERT Book 2019-20)
1. India is a populous country so is China. As compared to India & China, population of
Pakistan is less.
Larger size of population is a hindrance in the process of growth as it requires huge amount of
‘maintenance investment’-investment which is directed towards the maintenance of existing
standard of living. High maintenance investment implies low ‘development investment’
which hinders the process of growth and development.
However two demographic parameters are distinctly in favour of China:
(a) Low growth rate of population
(b) Low density of population
2. China has low density of population compared with India and Pakistan because of a very large
geographical area of China then India and Pakistan.
Other things remaining constant, lower density implies lesser stress on country’s natural
resources, raising its abilities for sustainable development.
3. Growth rate of population continues to be high in India and Pakistan. One Child norm
adopted by China in late 1970s has reduced the growth rate of population in China. However
this policy has some other implications also. For instance, after a few decades there will be
more elderly people in proportion to young people in China.
4. Urbanisation is high in China with India having 33% its people living in urban areas.
Urbanisation is closely linked with structural transformation in the country. It is a
consequence of a shift of working force from agriculture to industry and services.
5. Sex ratio is found to be biased against females in all the three countries because of preference
of male child. Low sex ratio indicates social backwardness.
B) GDP Growth
Annual Growth of GDP (%) 1980-2017
Country 1980-90 2015-17
India 5.7 7.3
China 10.3 6.8
Pakistan 6.3 5.3
Source: Key Indicators for Asia and Pacific 2016, Asian Development Bank, Philippines;
World Development Indicators 2018
(From NCERT 2019-20)
1. China achieved breakthrough in GDP growth in early 1980s. The breakthrough is attributed to
the following factors:
(a) Transition of the country’s economic system from centrally planned economy to market
economy.
(b) Focus on export oriented domestic production
(c) Influx of FDI due to China’s trade and investment reforms and setting up of Special
Economic Zones (SEZs)
(d) GLF campaign
(e) Availability of cheap labour force which gave China a comparative cost advantage
However, in the recent past, GDP growth in China has slowed down. Some notable
reasons in this regard are as follows:
(a) Slowdown in the global economies (European economies in particular) has lowered the
demand for Chinese products
(b) Chinese people are now exploring higher wage opportunities of employment. It is leading
to massive migration of skilled labour to rest of the world. Domestic investors are also
exploring opportunities of investment in economics where government intervention is less
and political as well as social liberty is more.
(c) One child norm introduced in late 1970s has reduced the growth rate of Chinese
population, but it has increased the dependency ratio in the country. The policy was
discontinued in 2015.
(d) Growth of domestic demand is slowing down because of the increasing propensity to
save.
2. Pakistan achieved a breakthrough in GDP growth in the mid 1980s because of economic
reforms, focussing on FDI and greater participation of the private sector in the process of
growth.
Growth rate of Pakistan has slowed down in late 2010s because of the reduction in foreign
and domestic investment due to political instability.
C) Sectoral Share of Employment and GVA (%)
Sectoral Share of Employment and GVA (%) in 2018-19
Sector Contribution to GVA Distribution of Workforce
India China Pakistan India China Pakistan
Agriculture 16 7 24 43 26 41
Industry 30 41 19 25 28 24
Services 54 52 57 32 46 35
Total 100 100 100 100 100 100
Source: Human Development Report 2019; Key Indicators of Asia and Pacific – 2019
(From NCERT)
(a) All the three countries have experienced a noticeable structural transformation. Primary
sector is no longer the principal contributor to GDP.
In 2018 – 19, in China 26% of its workforce engaged in agriculture and its contribution to
the GVA is 7%. In both India and Pakistan, the contribution of agriculture to GVA were
16% and 24% respectively but the proportion of workforce that works in this sector is
more in India (43%) than in Pakistan (41%).
24% of the Pakistan workforce is engaged in Industry but it produces 19% of GVA only.
In India industry workforce accounts for 25% but produces goods worth 30% of GVA. In
China industries contribute to GVA at 41% and employ 28% of workforce.
In all the three countries the service sector is emerging as a major player of development.
It contributes more to GVA and, at the same time, emerges as a prospective employer.
(b) In terms of sectoral contribution to GDP, economies of India and Pakistan shows a major
shift directly from primary to the tertiary sector. However, experience of China in this
respect is like the experience of most developed countries in the world (i.e., in terms of
percentage share of GDP, it was first the secondary sector and later the tertiary sector
which emerged as a leading sector of the economy)
Trends in Output Growth in Different Sectors, 1980 – 2015

a) In the last five decades the growth rate of agricultural sector has declined in China and
Pakistan
b) In the industrial sector China maintained a near double digit growth rate in 1980s but
began showing decline in recent years. For India and Pakistan, the growth rate of
industrial sector has also declined.
c) There was a positive and increasing growth of India’s service sector during the last five
decades.
d) China’s growth is contributed by the manufacturing and service sectors and India’s
growth by the service sector
e) Pakistan has shown deceleration in all the three sectors during this period.

D) Indicators of Human Development:

Some Selected Indicators of Human Development, 2017 – 2019

Note: * for the year 2011; for the years 2015.

Sources: Human Development Report 2019 and 2020 and World Development
Indicators (www.worldbank.org); Key indicators for Asia and the Pacific 2019, Asian
Development Bank (ADB).
• China is moving ahead of India and Pakistan of many indicators such as GDP per
capita, proportion of population below poverty line, literacy rate, health indicators
like mortality rates, access to sanitation, life expectancy, malnourishment.
• All the three countries report providing improved drinking water sources for most
of the population
 While forming any opinion on the basis of these statistics we have to use our conviction
also. Even though these are important indicators, still these are not all that should be
there. We also need ‘liberty indicators’

Liberty indicators are those indicators which represent the degree of

civil and political freedom to individuals in a country. For example,
‘the extent of democratic participation in social and political decision
making’, ‘the extent of constitutional protection given to rights of
citizen’ or ‘the extent of constitutional protection of the independence
of the Judiciary and the Rule of law’.
Without including such indicators and giving them adequate weightage, the
construction of a human development index remains incomplete.

APPRAISAL OF DEVELOPMENT STRATEGIES

Though different countries go through their development phases differently, let us take the initiation
of reforms as a point of reference. Reforms were initiated in China in 1978, Pakistan in 1988, and
India in 1991. Let us briefly assess their achievements and failures in pre-reform and post reform
period.

CHINA:
In pre-reform period
• There had been massive extension of health services in rural areas.
• Through the commune system, there was more equitable distribution of food grains
China did not have any compulsion to introduce reforms as directed by the World Bank and IMF to
India and Pakistan. But some adverse situations of the economy prior to 1978, forced China to go for
reforms.
• Despite extensive land reforms, collectivisation, the Great Leap Forward and other initiatives,
the per capita grain output in 1978 was same as it was in mid 1950s
• In 1978, the then government of China was not satisfied with the slow pace of growth and
lack of modernisation in the Chinese economy under the Maoist rule.
• They felt that Maoist vision of economic development based on decentralisation, self-
sufficiency and shunning of foreign technology, goods and capital, had failed.
The various reform measures led to rapid growth in China.
• Each reform measure was first implemented at a smaller level and then extended on a massive
scale.
 • Development of infrastructural facilities in the areas of education and health, land reforms,
long existence of decentralised planning and existence of small enterprises helped positively
in improving the social and economic indicator.
• Agricultural reforms (handing over plots of land to individuals for cultivation) brought
prosperity to a vast number of poor people. It created condition for the subsequent
phenomenal growth in rural industries and built up a strong support base for more reforms.

PAKISTAN
In Pakistan the reform process led to worsening of all economic indicators. As compared to 1980s, the
growth rate of GDP and its sectoral constituents decreased in the 1990s. The proportion of poor in
1960s was more than 40% which declined to 25% in 1980s and started rising again.
The reason for slow-down of growth rate and re-emergence of poverty in Pakistan’s economy are:
• Agricultural growth and food supply situation was based on good harvest and not on
institutional process of technological change. When there was a good harvest, the economy
was in good condition, when it was not, the economic indicators showed stagnation or
negative trends.
• Foreign exchange is an essential component for any country and it is always preferred to build
foreign exchange through exports of manufactured goods. However, in Pakistan, most of the
foreign exchange earnings came from remittances from Pakistani workers in the Middle-east
and the exports of highly volatile agricultural products.
• There was growing dependence on foreign loans on the one hand, and increasing difficulty in
paying back the loan on the other.
However, in the recent past, it is hoping to improve the situation by maintaining the high rate of
growth. Pakistani economy witnessed GDP growth at about 8% for three consecutive years (2002—
2005) due to the combined contribution of agriculture, industry and service sector.
The government of Pakistan is increasing its expenditure on various areas to reduce poverty.

CONCLUSIONS
INDIA
• Indian economy performed moderately, but majority of its people still depend on agriculture.
• India has taken many initiatives to develop infrastructure and improve the standard of living

PAKISTAN
• Political instability, over-dependence on remittances and foreign aid along with volatile
performance of agricultural sector are the reasons for slowdown of the Pakistan economy.
• In the recent past it is hoping to improve the situation by maintaining high rate of GDP
growth.
• It is also great challenge for Pakistan to recover from the devastating earthquake in 2005.
CHINA
• In China, the lack of political freedom and its implication for human rights are major concern.
• However, in the last four decades, it used the ‘market system without losing political
commitment’ and succeeded in raising the level of growth along with the alleviation of
poverty.
• China has used the market mechanism to create additional social and economic opportunity.
• By retaining collective ownership of land and allowing individuals to cultivate lands, China
has ensured social security in rural areas.
• Public intervention in providing social infrastructure brought positive results in human
development indicators in China.