Economic history of India and china

Pre-colonial period (up to 1773)

The citizens of the Indus Valley civilisation, a permanent settlement that flourished between 2800 BC
and 1800 BC, practiced agriculture, domesticated animals, used uniform weights and measures, made
tools and weapons, and traded with other cities.

Colonial period (1773–1947)

Company rule in India brought a major change in the taxation and agricultural policies, which tended to
promote commercialisation of agriculture with a focus on trade, resulting in decreased production of
food crops, mass impoverishment and destitution of farmers, and in the short term, led to numerous
famines.

Pre-liberalisation period (1947–1991)

Indian economic policy after independence was influenced by the colonial experience, which was seen
by Indian leaders as exploitative, and by those leaders' exposure to democratic socialism as well as the
progress achieved by the economy of the Soviet Union. Domestic policy tended towards protectionism,
with a strong emphasis on import substitution industrialisation, economic interventionism, a large public
sector, business regulation, and central planning. while trade and foreign investment policies were
relatively liberal.Five-Year Plans of India resembled central planning in the Soviet Union. Steel, mining,
machine tools, telecommunications, insurance, and power plants, among other industries, were
effectively nationalised in the mid-1950s

Post-liberalisation period (since 1991)

In the late 1970s, the government led by Morarji Desai eased restrictions on capacity expansion for
incumbent companies, removed price controls, reduced corporate taxes and promoted the creation of
small scale industries in large numbers. In response, Prime Minister Narasimha Rao, along with his
finance minister Manmohan Singh, initiated the economic liberalisation of 1991. The reforms did away
with the Licence Raj, reduced tariffs and interest rates and ended many public monopolies, allowing
automatic approval of foreign direct investment in many sectors.[55] Since then, the overall thrust of
liberalisation has remained the same, although no government has tried to take on powerful lobbies such
as trade unions and farmers, on contentious issues such as reforming labour laws and reducing
agricultural subsidies.[56] By the turn of the 20th century, India had progressed towards a free-market
economy, with a substantial reduction in state control of the economy and increased financial
liberalisation.

Chinese reforms

1978–84

first reforms began in agriculture, a sector long neglected by the Communist Party. By the late 1970s,
food supplies and production had become so deficient that government officials were warning that China
was about to repeat the "disaster of 1959" - the famines which killed tens of millions during the Great
Leap Forward.
1984–93

During this period, Deng Xiaoping's policies continued beyond the initial reforms.
Controls on private businesses and government intervention continued to decrease, and
there was small-scale privatization of state enterprises which had become unviable. A
notable development was the decentralization of state control, leaving local provincial
leaders to experiment with ways to increase economic growth and privatize the state
sector.[13] Township and village enterprises, firms nominally owned by local
governments but effectively private, began to gain market share at the expense of the
state sector.[14] Conservative elder opposition, led by Chen Yun, prevented many major
reforms which would have damaged the interests of special interest groups in the
government bureaucracy.[15] Corruption and increased inflation increased discontent,
contributing to the Tiananmen Square protests of 1989 and a conservative backlash after
that event which ousted several key reformers and threatened to reverse many of Deng's
reforms.[16] However, Deng stood by his reforms and in 1992, he affirmed the need to
continue reforms in his southern tour.[15] He also reopened the Shanghai Stock
Exchange closed by Mao 40 years earlier.

Although the economy grew quickly during this period, economic troubles in the
inefficient state sector increased. Heavy losses had to be made up by state revenues and
acted as a drain upon the economy.[17] Inflation became problematic in 1985, 1988 and
1992

1993-2005

In the 1990s, Deng forced many of the conservative elders such as Chen Yun into
retirement, allowing radical reforms to be carried out.[15] Despite Deng's death in 1997,
reforms continued under his handpicked successors, Jiang Zemin and Zhu Rongji, who
were ardent reformers. In 1997 and 1998, large-scale privatization occurred, in which all
state enterprises, except a few large monopolies, were liquidated and their assets sold to
private investors. Between 2001 and 2004, the number of state-owned enterprises
decreased by 48 percent.[14] During the same period, Jiang and Zhu also reduced tariffs,
trade barriers and regulations, reformed the banking system, dismantled much of the
Mao-era social welfare system, forced the PLA to divest itself of military-run businesses,
[19] reduced inflation, and joined the World Trade Organization. These moves invoked
discontent among some groups, especially laid off workers of state enterprises that had
been privatized.[20]The domestic private sector first exceeded 50% of GDP in 2005 and
has further expanded since.[21] However, some state monopolies still remained, such as
in petroleum and banking.[22]
2005–present

The conservative Hu-Wen Administration began to reverse many of Deng Xiaoping's

reforms in 2005.[5] Observers note that the government adopted more egalitarian and
populist policies.[23] It increased subsidies and control over the health care sector,[24]
halted privatization,[5] and adopted a loose monetary policy, which lead to the formation
of a U.S.-style property bubble in which property prices tripled.[25] The privileged state
sector was the primary recipient of government investment, which under the new
administration, promoted the rise of large "national champions" which could compete
with large foreign corporations.[5]

India GDP Growth Rate

The Gross Domestic Product (GDP) in India expanded 8.20 percent in the fourth quarter
of 2010 over the same quarter, previous year. From 2004 until 2010, India's average
quarterly GDP Growth was 8.40 percent reaching an historical high of 10.10 percent in
September of 2006 and a record low of 5.50 percent in December of 2004. India's diverse
economy encompasses traditional village farming, modern agriculture, handicrafts, a
wide range of modern industries, and a multitude of services. Services are the major
source of economic growth, accounting for more than half of India's output with less than
one third of its labor force. The economy has posted an average growth rate of more than
7% in the decade since 1997, reducing poverty by about 10 percentage points. This page
includes: India GDP Growth Rate chart, historical data and news.

India GDP Growth Slows to 8.2% in Q4

India's economy grew 8.2% compared to the same period a year earlier between October
and December, government data showed on March 1.Quarterly GDP at factor cost at
constant (2004-05) prices for Q3 of 2010-11 is estimated at Rs. 12,61,664 crore, as
against Rs. 11,66,145 crore in Q3 of 2009-10, showing a growth rate of 8.2 per cent over
the corresponding quarter of previous year.The economic activities which registered
significant growth in Q3 of 2010-11 over Q3 of 2009-10 are: agriculture, forestry &
fishing at 8.9 per cent, construction at 8.0 percent, trade, hotels, transport and
communication at 9.4 per cent, and financing, insurance, real estate and business services
at 11.2 per cent. The growth rate in mining& quarrying, manufacturing and community,
social and personal services is estimated at 6.0 per cent, 5.6 per cent and 4.8 per cent
respectively in this period.
 China GDP Growth Rate

The Gross Domestic Product (GDP) in China expanded 9.80 percent in the fourth quarter
of 2010 over the same quarter last year. From 1989 until 2010, China's average quarterly
GDP Growth was 9.31 percent reaching an historical high of 14.20 percent in December
of 1992 and a record low of 3.80 percent in December of 1990. China's economy is the
second largest in the world after that of the United States. During the past 30 years
China's economy has changed from a centrally planned system that was largely closed to
international trade to a more market-oriented that has a rapidly growing private sector. A
major component supporting China's rapid economic growth has been exports growth.

China GDP Expands 9.8% in Q4

China's gross domestic product growth sped up unexpectedly in the fourth quarter despite
a series of tightening measures by Beijing. China's GDP grew 9.8% in the fourth quarter
from a year earlier, faster than the third quarter's 9.6% increase.

China's industrial value-added output was up 15.7 percent for 2010 when compared to the
annual figure for 2009, with the growth rate registering a 4.7 percentage point increase on
the pace of growth registered in 2009.

In addition, the profits of large-scale industrial enterprises - which refers to enterprises

with annual sales revenue that exceeds five million yuan (about 750,000 US dollars) -
expanded 49.4 percent from a year earlier to reach 3.88 trillion yuan in the first eleven
months of the year. China's fixed-asset investment rose 23.8 percent from a year earlier to
reach 27.81 trillion yuan (4.22 trillion US dollars). Urban fixed-asset investment rose to
24.14 trillion yuan, up 24.5 percent from a year earlier, while rural fixed-asset investment
rose to 3.67 trillion yuan, up 19.7 percent year-on-year.
Impact of financial crisis on India

# India’s economy has performed extraordinarily well in the face of the most severe
global recession in recent decades, and it now looks poised to recover smartly despite
some headwinds to growth such as the weak monsoon and rising oil prices.

# India’s good performance is not only due to it being less vulnerable to the global crisis,
because of its lower exposure to trade. India has become more resilient to shocks of
various kinds as a result of reforms, especially with the strengthening of the banking
sector.

# Nevertheless, India was also fortunate in escaping a potentially more severe impact
from the global crisis. A powerful series of counter-measures by the major economies
arrested the financial panic, and allowed for a quick reflation of global demand; India
may not have been as resilient if global financial markets and global demand had not
steadied so quickly in response. India also benefited from domestic policies that
happened to have been put in place well before the crisis.

# Given our view of the fragility of global economic recovery and the still-high risk of
financial and other shocks in the global environment, India needs to address the policy
towards further strengthening economic resilience. In particular, it needs to address its
fiscal position

China

# Financial and trade transmission mechanisms had increased the People Republic of
China’s (PRC) vulnerability to the global crisis.

# The global crisis in extraordinarily better shape than many forecasters had expected.
This remarkable resilience can be traced to a system which allows swift policy responses
that are transmitted into the real economy with a relatively short time lag.

# As a result, the signs point toward the PRC’s economic growth surging very strongly
next year. We believe that the risks to economic growth are now low. The greater risks
that the PRC faces are now related to the unintended consequences of successful policy
actions.

# Inflationary expectations could surge and distortions in the economy could intensify.
Macro-economic policy settings thus need to be reset as quickly as feasible. In particular,
monetary policy stimulus needs to be withdrawn soon – monetary growth has to be reined
in and the exchange rate should return to the path of gradual appreciation seen between
July 2005 and mid-2008.

# The PRC has also shown a remarkable determination to pursue longer term structural
adjustments to ensure that its economy moves up the value chain and is more resilient to
the vagaries of the global environment:
India to overtake by 2030

India is poised to take over the developed countries to emerge at the top of the heap in the
global economic superpower league by 2030, says a survey.

More than half of the respondents (53 per cent) of a survey commissioned by London-
based independent think-tank Legatum Institute said India is likely to be the world's most
important economic power by 2030.

According to the respondents of the survey, India is now on course to outstrip developed
nations such as -- the United States, Japan, Germany and the fast-emerging economic
giant China over the next two decades.

The survey, which questioned nearly 2,400 Indian senior managers, entrepreneurs and
aspiring entrepreneurs said the levels of confidence among the country's wealth-creators
is very high, with nearly nine in ten saying they expected India to be in a stronger
economic position in the next five years. Only one in five said the world economic crisis
had badly affected business in India.

Business start-ups in India in 2007 numbered 20,000 and the evidence for India's
economic optimism is vast:

# India's automobile industry is one of the fastest growing in the world, boasting exports
greater in number than China.

# India is one of the world's leading outsourcing destinations for many of the world's top
businesses, with annual revenues of nearly $60 billion.

# It is home to a $52-billion textile manufacturing sector.

# Mumbai is a recognized global financial centre.

# India is also a world leader in innovation from ultra-inexpensive cars to pioneering

computer software.

Surveys indicate India has better corporate governance standards and its companies are
more commercially-driven. This explains why, despite China’s superior economic growth
and macroeconomic stability, India’s rate of return on assets has been much higher, non-
performing loans in the banking sector lower, and stock market performance much better.

Social indicators reflect generally improving living conditions for the average Chinese.
China also enjoys superior physical infrastructure, although India’s availability of skilled
workers, especially engineers, is much better regarded.
Conclusion

1. India is able to sustain 7 to 8 % growth rate, which is only 1 to

2%less than china’s growth rate
2. It shows that china’s growth comes from massive accumulation
of resources, while India’s growth comes from increasing
efficiency
3. Except for some small products, the world-class manufacturing
facilities for which china is famous for are products of FDI, not
of indigenous Chinese companies. Made in china labels are still
more seen, then Made in India ones ; but what is made in china
is not necessarily made by China, soon made in India will be
synonymous with made by India and Indians will not just get
the wage benefits of globalisation but will also keep the profits
unlike so many cases in china.
4. For sustainable-economic development the quality and quantity
of human capital will matter far more than those of physical
capital.