Why India lags behind China

President Xi Jinping’s weekend visit to India and his call for “new glory for Asian civilisations” remind us that China and India shed the yoke of Western imperialism in the 1940s. Since then, China’s progress has made it the world’s second economic and military power and earned it widespread recognition as the main challenger to America’s global primacy. From Chennai Xi flew to Kathmandu. Laden with investment offers to Nepal, his move symbolised China’s economic advance on India’s Himalayan doorstep.

China’s per capita GDP is $10,841 and its rank on the Human Development Index (HDI) is 86. India ranks 130. Its nominal per capita income is $2,309. The latest Global Competitiveness Index (GCI) ranks China 28th among world economies. India has fallen to rank 68 largely because some other countries have improved their investment conditions. 

Why is India lagging so far behind China? Many Indians are quick to say that dictatorships make progress faster than democracies because they can avoid time-consuming democratic procedures. They are wrong. Most of the world’s top 20 states on the HDI are democracies. Economically, India is the democracy that disappoints. 

Dictatorship is no guarantee of economic success. Economic failures accounted in large measure for the collapse of the authoritarian multicultural states of the USSR and Yugoslavia in 1991. In contrast, India’s ability to hold itself together showed that its multicultural, multireligious diversity could be accommodated through democratic consensus. Economic liberalisation, started by Congress Prime Minister Narasimha Rao in 1991, advanced progress. The world saw “India rising” in the 1990s. 

But with China so far ahead, it can be asked whether India is still rising. After 40 years of progress at breakneck speed, China’s growth is slowing down. But India was already straggling behind. The last five years have seen economic decline, foreign investors pulling their money out of India, falling manufacturing output and exports. India's record as a business-unfriendly country is a sticking point in its ties with many countries. 

Education ranks as one of India’s biggest failures. India is the only country which aims to become a global economic power without creating a reasonable level of universal education. More than a quarter of its population remains illiterate. Good education has helped Japan, the US, China and Southeast Asian countries improve the skills of their huge labour forces, to craft their vibrant, export-led economies and increase their economic influence. Indian labour is an unfortunate contrast to the proficient workers of a once war-ravaged  but rising Vietnam, and also of a prospering Indonesia, which sees itself as the global maritime fulcrum of Southeast Asia.  

A file photo of Chinese President Xi Jinping and Indian Prime Minister Narendra Modi at the Hubei Provincial Museum in Wuhan, Hubei Province

The high levels of scientific and technological education also explain the global ascendancy of the US since the 20th century, and why the US and China can use their technological advancement to build up their world power in the 21st century. (In contrast, India’s multifaceted economic decline over the last five years has made it hard to upgrade its armed forces.) China is well-placed in many contemporary areas like artificial intelligence and robotics. It can challenge the West economically and in scientific research. Neither can be done by India.  

India’s deficiencies weaken its position in international financial negotiations and thwart its hopes of becoming a global player. China's prowess enables it to stake a claim to world influence. China’s $15 trillion economy supports its economically and geopolitically motivated Belt and Road Initiative which touches 62 per cent of the world’s population. India hasn’t advanced enough to have comparable economic reach. 

China’s economic clout has enabled it to retaliate against President Trump’s trade war, defy the decade-long international sanctions on Iran (2005-16) and Trump’s recent sanctions on that country. China has therefore emerged as the leading investor and foreign influence in Iran. It is strengthening its position in West Asia. By bowing to Trump’s oil-import ban, India could lose the position it had gained in Iran since 2015. 

China has even enhanced its influence as the largest trading partner of India’s friendly neighbours like Myanmar. It is the largest arms seller to Myanmar, Bangladesh and unfriendly Pakistan. 

China claims to be reshaping and complementing the existing norms of global governance. Its Asian Infrastructure Investment Bank has attracted developing countries in Asia and Africa and also some of the European Union’s prosperous West European members — which are simultaneously America’s allies in the NATO. India is a founding member of the Beijing-led AIIB — but it is China which is the first among supposed equals. 

India’s rich resources — combined with sound economic policies — should have helped it to achieve much higher HDI and GCI rankings by now. Both indices show that India’s health conditions and workers’ skills rank below those of China. On skills, the GCI ranks China at 54, India at 107. On health, China’s rank is 40; India’s 110. 

Economically sluggish India should boldly reform its economic policies and poor governance in order to incentivise the honest hard work of its citizens that is necessary for progress. Indian agriculture, manufacturing and industry must be made more competitive internationally. To create markets that function better than those of authoritarian China, New Delhi must strengthen the rule of law and improve the quality of democratic governance. Only then will the people of India increase their life chances; only then will democratic India narrow its gap with authoritarian China and play a larger world role. 

The author is a founding professor of the Centre for Peace and Conflict Resolution in New Delhi. www.anitaindersingh.com