r2i forum

China became the second biggest economy in the world...

In 1987, India and China GDP were the same......Now China has beat Japan

Liberalization:
China opened it's markets in 1978, China had enormous growth after that, and especially in the last Decade

It takes time for policy changes to make significant effect on the economy, though it was growing gradually, China's GDP grew four times from 1.2 Trillion USD in 2000 to 5 Trillion USD in 2010

India opened in 1991 (approximately 13 years later), and India's GDP now is close to what China was in 2000

Demographics:
Chinese Demographics was condusive to growth, as Chinese labor force is operating at it's maximum potential (with savings for investments)

Indian Median age
34.1 years (2009)

India is going to have that kind of labor

Indian Median age
25 years (2009)

Check the chart

http://www.google.com/publicdata?ds=wb-wdi&met=ny_gdp_mktp_cd&idim=country:CHN&dl=en&hl=en&q=China+GDP#met=ny_gdp_mktp_cd&idim=country:CHN:JPN:IND

Question:

Will that happen to India? Will India have the kind of growth as china did from 2012/2013?

Just don't say "Yes" or "No", try and justify your view/perspective (without being prejudice)....

Well It depends on the Govt Policy in going forward. One thing to remember is 2000 to 2005 was global economy boom. China was in right place at right time (with Olympics too )

For India to beat Chinese economy..few things have to satisfy

1. Free flow of capital into India: With recession and gloomy outlook, money will flow to safer assets like US, Japan. So much needed capital for the growth might be challenge for next few years (5 to 10 years).
2. Govt policy: Govt so far has taken right steps like deregulating oil, allowing FDI in some sector. But need to do a lot especially in traditional manufacturing space, Allowing FDI in Defense, Bank, Insurance, telecom are good start
3. Corruption: I won't go deep but hopefully corruption will not increase from present level (hopefully go down)
4. Infrastructure: China did a superb job in boosting its infrastructure. India can definitely learn from China in this matter. I feel like this is the game changer for India. If we get infrastrcture like roads, communication, ports and airports than we can grow
5.Planning: China's central planning helped a lot in its growth. India's states with varied needs might be little challenge to have a unified vision and growth
6. Resource management: US, China are best in preserving their natural resources and obtaining cheap resource from outside. This has given them an edge in competitiveness. India is famous of looting its own natural resources without worrying for future. We need to be careful here.

Overall I believe India will outperform rest of the world in next 2 decades but may not beat China.

Good point about the global boom.....

here are my thoughts on your points

1. Money flows to the most profitable sector/location (high returns), US growth have almost stalled, and investments in Japan are not getting that much returns

Not denying that people like safe assets, but when there is a chance for higher returns, investors will be willing to take that risk? won't they?

2. Additionally, I want to see them stagger out of Agricultural sector (the whole thing is a mess now), instead of the high regulation, subsidy and the cost associated with it, they might as well import agri products and expect more bang for their buck. (they should not see self sufficiency as a national pride, efficiency is a national pride)

3. Corruption: Can't agree more, also corruption is mostly there with Public sector and as it shrinks as a percentage of the economy, this should also come down (hopefully)

4. Infrastructure: Central should play a major part with task assigned to states
So much perishable goods go waste due to poor Infrastructure and lack of logistics

5.Planning: agreed, no long term vision

6. Resource management: True

Additionally, Inflation is something I want the government to tackle without hurting the growth.

The day roads will get repaired the same year that they have been dug up for whatever reason, I will say India did turn a corner. That's my own criteria of justifying progress. Sorry no Offense but if we can't fix a road forget about competing in the Global arena.

I do agree with you and share your frustration on poor maintenance of Indian roads......
But the truth of the matter is, we don't have to compete, we just have to be a participant in the Global arena, piggy back the global economy, (that's exactly what China did, their transformation didn't come from their own consumption).

munna_bhai;321689The day roads will get repaired the same year that they have been dug up for whatever reason, I will say India did turn a corner. That's my own criteria of justifying progress. Sorry no Offense but if we can't fix a road forget about competing in the Global arena.

sgoutham;321725I do agree with you and share your frustration on poor maintenance of Indian roads......
But the truth of the matter is, we don't have to compete, we just have to be a participant in the Global arena, piggy back the global economy, (that's exactly what China did, their transformation didn't come from their own consumption).

I dont agree that China just piggybacked on the globalization theme. They have invested massively in their infrastructure; have provided easy access to credit for setting up of small businesses and more importantly have the leadership in place to take quick decisions.

dup..deleted

Though they invested heavily on whatever you had mentioned these, most of the goods they produced were sold to consumers overseas rather than for their own consumption, their rate is like 1/3rd compared to India more than 1/2 of GDP (I may not be accurate). Govt keeps the currency from appreciating and inturn affects consumption

China is doing this for a reason as their growth up until now came from overseas, I believe they will change their policy to stimulate consumer spending for another decade of growth

oasis138;321752I dont agree that China just piggybacked on the globalization theme. They have invested massively in their infrastructure; have provided easy access to credit for setting up of small businesses and more importantly have the leadership in place to take quick decisions.

sgoutham;323595most of the goods they produced were sold to consumers overseas rather than for their own consumption, their rate is like 1/3rd compared to India more than 1/2 of GDP (I may not be accurate). Govt keeps the currency from appreciating and inturn affects consumption

So what does your statement have to do with discussion above ? China is exporting to the world because it has a comparative advantage. in doing so.

as for currency - Gov in China is doing something similar to what we see RBI do. As per some estimates Indian currency is 60-70% under valued. Right now India does not feature as a topic in global imbalanced so no one talks about INR...once they do trust me they will and unlike China which thinks about its interests first we might actually cave in and let our INR appreciate.

Asia catching up - Hans Rosling predits 27th July 2048 as the day when economies of India/China will be on par with US, UK, Japan.

Very interesting TED video.

http://www.ted.com/talks/hans_rosling_asia_s_rise_how_and_when.html