India and its Neighbours

• Geographical boundaries are becoming meaningless in today's globalized world
• It is important for neighboring countries to understand each others strategies, especially in developing countries
• This unit compares India's strategies to Pakistan and China

Comparative Development Experiences of India and its Neighbours

• After studying this chapter, students will:
• Identify comparative trends in economic and human development indicators for India, China, and Pakistan
• Assess the strategies these countries use to reach their current development levels

Introduction

• Previous units explored India's developmental experiences and policies.
• Economic transformation worldwide has short and long-term implications for all nations, including India.
• Nations seek ways to strengthen their economies, forming groups like SAARC, EU, ASEAN, G-8, G-20, and BRICS.
• Nations are trying to understand their neighbors' improvement, to compare their own strengths and weaknesses.
• Understanding other economies is vital for developing countries amid globalization, as they compete not only with developed nations.
• Economic actions in the region influence general human development within shared environments.
• This chapter will compare India with Pakistan and China, its two biggest neighbouring economies.
• Although these nations are endowed with vast natural resources, India has a large democracy, Pakistan has a military political power, and China has a command economy.

Developmental Path - A Snapshot View

• India, Pakistan, and China share numerous parallels in their developmental strategies.
• All three countries began their developmental journeys around the same time.
• India and Pakistan gained independence in 1947.
• China established the People's Republic of China in 1949.
• India announced its first Five-Year Plan for 1951-56, Pakistan in 1956, and China in 1953.
• Since 2018, Pakistan has been working on the 12th Five Year Development Plan (2018–23).
• Since 2021 China has been working on the 14th Five Year Plan (2021–25).
• Until March 2017, India followed the Five Year Plan model.
• India and Pakistan adopted similar strategies:
• Creating a large public sector
• Raising public expenditure on social development
• Until the 1980s, growth rates and per capita incomes were similar across India, China and Pakistan.

China

• After the establishment of People's Republic of China, all critical sectors, enterprises, and individual-owned lands were government controlled.
• The Great Leap Forward (GLF) campaign, initiated in 1958, aimed to industrialize China.
• People were encouraged to establish industries in their backyards.
• Communes started in rural areas.
• Under the Commune system, people cultivated lands collectively.
• In 1958, approximately 26,000 communes covered nearly all the farming population.
• The GLF campaign encountered challenges, including a severe drought that caused havoc and killed ~30 million people.
• Russia withdrew its professionals, amid conflicts with China, who'd been assisting China with industrialization.
• In 1965, Mao introduced the Great Proletarian Cultural Revolution (1966–76), sending students and professionals to work and learn in the countryside.
• China's present industrial growth is traced back the reforms in 1978.
• Reforms initiated in agriculture, foreign trade, and investment
• Commune lands were divided into small plots allocated to individual households for use (not ownership).
• Households were allowed to keep all income after paying taxes.
• Later, reforms were expanded to the industrial sector:
• Private sector firms and township and village enterprises (owned and operated by local collectives) were allowed to produce
• State-Owned Enterprises (SOEs) were made to compete.
• Reform included dual pricing:
• Farmers and industrial units were required to sell fix quantities of inputs/outputs according to government prices fixed by the government
• The rest were purchased and sold at market prices
• Over time, as production increased, the proportion of goods transacted in the market increased.
• Foreign investors attracted to special economic zones.

Pakistan

• Pakistan also follows the mixed economy model with coexistence of public and private sectors.
• During the late 1950s and 1960s, Pakistan introduced a regulated policy framework for import substitution-based industrialisation.
• Policies combined tariff protection for manufacturing consumer goods with import controls on competing imports
• The Green Revolution led to mechanization and increased infrastructure investment, increasing foodgrain production.
• dramatic changes to agrarian structure
• Nationalization of capital goods industries in the 1970s.
• Pakistan shifted its orientation during the late 1970s and 1980s:
• Denationalization
• Encouragement of private sector
• Pakistan got financial support from western nations and remittances, growing emigration to to Middle-east.
• This stimulated economic growth and incentives to the private sector.
• A conducive environment for new investments.
• Reforms initiated in 1988

Demographic Indicators

• Of every six people globally, one is Indian and another is Chinese.
• Population of Pakistan makes up roughly one-tenth of China or India.
• China is the largest nation by and largest geographic area.
• China's density is the lowest.
• Pakistan has the highest population growth.
• Followed by India
• China
• The one-child rule introduced in China in the late 1970s, as a major factor for low population growth.
• Led to decline in sex ration, number of females per 1000 males
• Sex ratio is low across all three because of son preference.
• All three countries are trying to improve the situation in recent times.
• One-child norm has further implications:
• China will have more older people in proportion to young people.
• Couples now allowed to have two children.
• Fertility rate is higher in Pakistan and very low in China.
• China has high urbanization with 59% - India has 34% citizens in urban areas
• Pakistan has 37%

Gross Domestic Product and Sectors

• China is a talking point because of its GDP growth.
• China has the second largest GDP (PPP) of $22.5 trillion in the world
• India's GDP (PPP) is $9.03 trillion.
• Pakistan's GDP is $0.94 trillion (11% of India's GDP).
• India's GDP is about 41% of China's GDP.
• In the 1980s many developed countries were struggling to maintain 5% growth
• China could maintain close to double-digit growth.
• During the 80's Pakistan ahead of India, and China had double didgit growth
• During 2015–17, Pakistan showed a decline.
• Pakistan has a higher proportion of urban population than India.
• China's geography and climate means a relatively small portion is suitable for cultivation.
• Only about 10% of the total land area.
• Until the 1980s, over 80% of China's population depended on farming.
• They were encouraged to to leave their fields and pursue other activities like commerce, handicrafts, and transport,
• In 2018–19, 26% of the workforce engaged in agriculture contributed 7% to the GVA.
• India and Pakistan agriculture contributed 16% & 24 % to the GVA while the proportion of the workforce in India more
• 41% people in Pakistan work in agriculture.
• 43% per cent workforce in India, 24% in Pakistan producing 19 per cent of GVA engaged in industry.
• In India the industry workforce accounts to 25% but produces 30 percent.
• In China the industries contribute to GVA at 41 per cent and employ 28 percent of workforce
• Across India, China, Pakistan the service sector contributed highest share of GVA.
• Over normal development: Shifts employment and output from agriculture to industry to services.
• Happpening across India as proportions of workforce engaged in industry in India and Pakistan were low
• The contributions to GVA 30% in India and 19% in Pakistan. Shift occurring directed to the service sector.
• The service sector contributes, same time becomes prosepctive sector across India If proportion of Pakistani workforce that was shifted in 1980's it was faster in shifting workforce to the service sector
• India, China, Pakistan employed 17,12.27 per cent its workforce, service sectore 2019
• Reached levels in sectors 32% 46 and 35 per cent .
• Over the last five decades decline large proportion workforce across service sectors
• China has maintained near doube digit-grwoth in industrial sector in 1980's
• China began showing a slower decine in recent sectors

Indicators of Human Development

• India, China, and Pakistan are in many developing countries.
• China is ahead of Pakistan and India.
• Indicators are GDP per capita, mortality rates, access to sanitation, rate of literacy, standards of living
• China and Pakistan is reducing levels of poverty and sanitation
• Maternal mortality rates for every 1 lakh births are:
• China at 29 women died
• Pakistan at 140 women died
• India at 133 women died.
• All the three countries population drink improved sources of water.
• China has smallest share of poor among the three.
• When making judgements of questions we should consider human developments with questions

Development Strategies - An Appraisal

• Developmental strategies can be a model and give lessons and guidance.
• The reform process are point of references and assess achievements
• Reasons for China's reforms in 1978:
• China under Mao wanted an economic vision
• Decentralisation failed under foreign technology in 1978
• In mid-1950s with grain output
• The establsiment infrastructure in education areas positive for income sector reform period
• More equitable distribution of grains Experts said
• Each reform was first created smaller level then extended on massive scale
• The cost of success were examples to rapid growth in China.
• In Pakistan the reform process for worse for the economic indicators growth not improved -International data indicates poverty for lack of Pakistan
• The portion for 1960s was more than (40%) that declined to (25%) 1908s -Reasons for slow-down food situation and agricultural was not based on good harvest

Conclusion

• India, China and Pakistan travelled a developmental path.

• Till the 1970s, the same level of level of development occurred

• The initiatives help develop the countries

• For the reasons for China, the reasons are instability

• Pakistan economy and poltiical instability led to slowdonw

• Many macroeconomy are moderate growth and recovery

• China system without losing the commitment

• China succeeded releasing growth levles

• Unlike India and Pakistan their attempt to privatise their sector is to

• China mechanism more economic opportunities

• Retaining owernships and collective the intervention has had positive impacts