Comparing apples to oranges? Well, that is how our honourable Finance Minister sees comparisons between India and China. According to him economic comparisons with India's oriental neighbour are irrelevant! As reported by a business daily, while courting queries from Hong Kong investors, the FM responded to that effect.
Now, we must acknowledge that at least he got the facts right. Most of China's economic statistics point in the opposite direction to India's. Fiscal surplus, burgeoning forex surplus and export of capital are yet foreign concepts to India's economic policy makers. Notwithstanding a few corporate overseas investments, India is still largely dependent on import of capital or FDI (foreign direct investment). Hence it is true getting close to China's economic stature is a distant dream for India. Not that we should ape the economy or its policies blindly. But a healthy comparison, however disillusioning, is necessary we believe.
Exactly why we do not agree with the FM on his views about India - China comparison. Comparing India's fiscal and forex positions to economies that are worse off is no solution. That the US and Euro zone are doing no better cannot be a consolation for India! And hence, however remote, benchmarking with China's economic achievements is a must have for India's policy making.
Further it is not just China's positives that count. We need to take lessons from the nation's failures as well. China is criticized for lack of corporate financial transparency and limited regulation on banks. This was a lesson that India took to heart. Large Indian corporate and banks today find more favour amongst global investors particularly for this reason.
Another factor that makes comparison with China inevitable is the similarity in demographics. Here too India has some warning signals to pay heed to. As per China's National Bureau of Statistics, the percentage of its working population started falling 2011 onwards. This is nothing but an early warning signal about impending change in demographic profile. For India, such a change is still in the distant future. But could nevertheless derail India's consumption story.
Thus India has not one but many cues to take from China. Turning a blind eye to the similarities and dissimilarities is not a solution. Hope the FM is listening!
Now, we must acknowledge that at least he got the facts right. Most of China's economic statistics point in the opposite direction to India's. Fiscal surplus, burgeoning forex surplus and export of capital are yet foreign concepts to India's economic policy makers. Notwithstanding a few corporate overseas investments, India is still largely dependent on import of capital or FDI (foreign direct investment). Hence it is true getting close to China's economic stature is a distant dream for India. Not that we should ape the economy or its policies blindly. But a healthy comparison, however disillusioning, is necessary we believe.
Exactly why we do not agree with the FM on his views about India - China comparison. Comparing India's fiscal and forex positions to economies that are worse off is no solution. That the US and Euro zone are doing no better cannot be a consolation for India! And hence, however remote, benchmarking with China's economic achievements is a must have for India's policy making.
Further it is not just China's positives that count. We need to take lessons from the nation's failures as well. China is criticized for lack of corporate financial transparency and limited regulation on banks. This was a lesson that India took to heart. Large Indian corporate and banks today find more favour amongst global investors particularly for this reason.
Another factor that makes comparison with China inevitable is the similarity in demographics. Here too India has some warning signals to pay heed to. As per China's National Bureau of Statistics, the percentage of its working population started falling 2011 onwards. This is nothing but an early warning signal about impending change in demographic profile. For India, such a change is still in the distant future. But could nevertheless derail India's consumption story.
Thus India has not one but many cues to take from China. Turning a blind eye to the similarities and dissimilarities is not a solution. Hope the FM is listening!
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