For the past 10 years, India has emerged as one of the fastest developing economies in comparison to China and other BRIC countries.

India’s diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries and a multitude of services. The agricultural sector accounts for less than half of the work force whilst the service sector is the major source of economic growth, accounting for nearly two-thirds of India’s output with less than one-third of its labor force. India’s economic growth began to slow down in 2011 because of a decline in investment caused by high interest rates, rising inflation, and investor pessimism about the government’s commitment to further economic reforms. In late 2012, the Indian Government announced additional reforms and deficit reduction measures, including allowing higher levels of foreign participation through direct investment in the economy. The outlook for India’s long-term growth can be deemed positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. In actuality, India’s population whom as a majority occupy more low skilled jobs has enabled India to attract more foreign investment.

However India’s government is struggling to boost the economy but with support from large companies such as; TATA and Reliance, India’s economy has been able to successfully reduce prevalent issues like unemployment whilst increasing the level of production that therefore allows for massive improvements within the economy.

Despite this, India faces many challenges that it has yet to fully overcome, including poverty, corruption, violence, discrimination against women, an inefficient power generation and distribution system, limited non-agricultural employment opportunities, high spending and an inadequate availability of quality basic and higher education. In 2013, the growth of the economy declined reaching it’s lowest point in the last decade, as India’s leaders struggled to improve the country’s wide fiscal and current account deficits. Rising macroeconomic imbalances in India and improving economic conditions in Western countries, led investors to shift capital away from India, prompting a sharp depreciation of the rupee. As a result a greater amount of investors are now turning towards to the Chinese market.

As we compare the Indian market to the Chinese market, it is evident that there are many differences. Firstly, the Chinese economy has shifted from a planned economy towards more market oriented economy and this occurred when China became the worlds largest exporter in 2010.The market include electronics, food supplies and machinery.

There were many reforms made which decreased the planned economy and led the Chinese private market to find opportunity to develop. There was growth in the private sector, which made development in the stock markets therefore helping the market to open up for foreign investment. In 2013, China stood as the second-largest economy in the world after the US, having surpassed Japan in 2001. The dollar values of China’s agricultural and industrial output each exceed those of the US; and China is second to the US in the value of services it produces. Still, per capita the income is below the world average. The Chinese government faces numerous economic challenges, including: reducing its high domestic savings rate and correspondingly low domestic consumption, facilitating higher-wage job opportunities for the aspiring middle class, increasing numbers of college graduates, reducing corruption and containing environmental damage and social strife related to the economy’s rapid transformations as well as the high population density. One consequence of the population control policy is that China is now one of the most rapidly ageing countries in the world as there are less number of births in China causing the number of people older to increase due to low death rates. Another significant issue within the Chinese economy is the rapid deterioration of the environment – air pollution, soil erosion, and the steady fall of the water table, especially in the North – due to the increase of carbon emissions from factories.

According to the World Bank and IMF by the end of 2014, China will make up 16.48% of the world’s purchasing-power adjusted GDP (or $17.632 trillion), and the US will make up just 16.28% (or $17.416 trillion) which therefore means China has overtake the US economy .The question still remains will China be able to retain the position of the most strongest economy of the world or will the other BRIC economies like India snatch its position?

Sameed Iqbal



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