India has been a rare bright spot in the global economy, enjoying an estimated 7 percent growth rate this year, even as much of the rest of the world is struggling with energy and financial crises. But the country is also thought of as a disappointment for failing to keep up with the dynamism of China, its fellow presumptive future world power. Indian Prime Minister Narendra Modi took office promising to change that reputation—but his record is mixed.
Why has India failed to keep pace with China in recent decades? Why did the country never become a manufacturing powerhouse? And what kind of economic policymaker has Modi proved to be?
Those are some of the questions that came up in my conversation this week with FP columnist Adam Tooze on the podcast we co-host, Ones and Tooze. What follows is a transcript of the interview, edited for clarity and length. For the entire conversation, subscribe to Ones and Tooze on your preferred podcast app.
Cameron Abadi: It has become something of a cliche to pair China and India when discussing the future of the world economy—the future world powers in the East. But there is also a sense that India’s economy has never quite taken off the way China’s did, especially between 1980 and 2010. What has held it back? Is it democracy in India as opposed to China’s political system?
Adam Tooze: I was literally sitting in my hotel room this afternoon thinking, why does anyone focus on any other question? It is very dramatic. Why did these two giant countries—each of them has about a sixth of the world’s population—diverge to the extent that they have? It’s important to say that no country, no economy, has ever grown the way the Chinese have. So to compare the Indians to China is rather unfair to the Indians. But you can only go so far with the apologetics because the results are spectacularly different. And this is not a matter of abstract numbers. This is a matter of people’s livelihoods. The extreme poverty which still haunts very substantial parts of the Indian population—there really is no counterpart in China anymore.
But the numbers are very impressive. So, in the 1960s, life expectancy in China, in India, was kind of level. And then in the period of the Cultural Revolution, when we think of China as going through absolutely massive and destructive upheaval, the life expectancy surges.
And by the early 1980s, when the World Bank first gets access to China, what they see in China is a poor country, still low GDP per capita, not much higher than India’s, but poised for growth because China, by the early 1980s, had universal elementary education enrollment and life expectancy numbers and health provision more like those of a lower-income advanced economy—so, comparable to, say, the provision in Italy by the early 1980s. It’s a really remarkable contrast. And when you talk to Indian specialists, they come back to this point again and again: It’s something to do with state capacity, something to do with infrastructural capacity.
And so, in a really weird way, in a way that’s really taken me aback several times with centrist policy people, not leftists, they converge on this question of how much difference did it make that India did not have a genuine social revolution at the moment of independence from Britain. And that the nationalist movement, for all of the popular mobilization that Gandhi and his cohorts made possible, always shied away from unleashing the full force of a popular revolution that would have genuinely upheaved the social structure and transformed it, that might have challenged the caste system in a direct way. None of that happened. So instead, India transitions out of colonial rule, which was so oppressive in many ways and unproductive in many ways into independence but without that radical transformation. And I think if you’re looking for deep answers to this question, you end up in places like that. And what that explains then is this lack of infrastructural capacity and ultimately then things like the lack of investment, which is just lower in India; the lack of spending on education, which is lower than in China; the lack of spending on health, which is lower than in China.
CA: To jump to the present: Indian Prime Minister Narendra Modi has been in office for a while, and he has promised a kind of ideological transformation of the country in general—but he also ran on an ambitious platform to remake the Indian economy. How is his record? What kind of policymaker has he been, and has he kept his promises?
Read More at https://foreignpolicy.com/2022/10/04/china-india-economic-gap-tooze/
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