India China GDP

by Guruprasad

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We always read about reports saying that Indian & China are going to be the World Superpowers. It brings a smile on our face and a bit of complacency. But lets face the hard reality.
Here is a graph showing the GDP of both the countries over the years.

Notice how India and China were both at the same level at 1990. During 1991, the Indian GDP started dipping due to the verge of Indian Bankrupcy. Only due to liberalization, the Indian GDP started improving again and has been growing gradually. But at the same time look at China’s GDP growth. It is light years ahead of us and the growth from 2000 has been a typical exponential graph like e^x, which every Math professor would love to use in his graph lectures as a practical example..

Now think about why such a difference. We Indians have always thought that our standard of living has grown tremendously over past 10-15 years. in 1990, most of the managers could not afford a car. But today, even freshers can afford. Then whats wrong in the graph? If both India and China are growing, how can India grow relatively so slowly?

I think its because of the improper distribution of the incoming wealth in India compared to China. No doubt, the standard of living (i.e per capita income) for urban ppl has increased tremendously but they constitute less than 10% of the population of India. We look at malls, coffee shops & fast cars in cities and think “India Shining”. But the reality is that only top 10-15% is shining while the rest is getting rusted.. So this graph being the overall GDP comprising of urban and rural, the growth seems slow.

Whereas in China, the wealth distribution is pretty uniform. If the country prospers incrementally, every section of the population also would have prospered.

Now another big question. Why is the wealth distribution in China uniform but not in India? For that we might have to see what is the reason for prosperity of the 2 nations.
India is basically a Knowledge hub while China is a manufacture hub.
Knowledge is something which comes through good education whereas anybody can do manufacturing irrespective of their education. That is why China is making merry now.

Lets not shy away from the fact that elementary education is in a pathetic condition in India. The conditions of govt schools is unpardonable. Unless we have revolutionay policies which can ensure 100% literacy, our graph is going to be like this only. Another fact is that not all the jobs in India are going to be knowledge jobs. We need to have a good balance of knowledge jobs as well as manufacturing jobs. So unless we have revolutionary policies which can ensure jobs in rural with the help of agressive vocational training etc, our graph is going to be like this.

I want to add more, but before that, please give your opinion as to why do you think there is such a difference in graph.

Google has an economic indicator tool which can be used to analyze and compare historical data.
Try playing with the tool here: