NCERT Class XI Economics: Chapter 10 – Comparative Development Experiences if India and Its Neighbours
National Council of Educational Research and Training (NCERT) Book for Class XI
Chapter: Chapter 10 – Comparative Development Experiences if India and Its Neighbours
Class XI NCERT Economics Text Book Chapter 10 Comparative Development Experiences if India and Its Neighbours is given below.
After studying this chapter, the learners will
- figure out comparative trends in various economic and humandevelopment indicators of India and its neighbours, China and Pakistan
- assess the strategies that these countries have adopted to reach theirpresent state of development.
In the preceding units we studied thedevelopmental experience of India indetail. We also studied the kind ofpolicies India adopted, which hadvarying impacts in different sectors.Over the last two decades or so, theeconomic transformation that is takingplace in different countries across theworld, partly because of the processof globalisation, has both short as wellas long-term implications for eachcountry, including India. In the post-Cold War world, nations have beenprimarily trying to adopt variousmeans which will strengthen their owndomestic economies. To this effect,they are forming regional and globaleconomic groupings such as theSAARC, European Union, ASEAN,G-8, G-20 etc. In addition, there is alsoan increasing eagerness on the partsof various nations to try andunderstand the developmentalprocesses pursued by theirneighbouring nations as it allows themto better comprehend their ownstrengths and weaknesses vis-à-vistheir neighbours. In the unfoldingprocess of globalisation, this isparticularly considered essential bydeveloping countries as they facecompetition not only from developednations but also amongst themselvesin the relatively limited economic spaceenjoyed by the developing world. Besides, an understanding of the othereconomies in our neighbourhood isalso required as all major commoneconomic activities in the regionimpinge on overall humandevelopment in a shared environment.
In this chapter we will compare thedevelopmental strategies pursued byIndia and the largest two of itsneighbouring economies—Pakistanand China. It has to be remembered,however, that apart from thesimilarities in their physicalendowments, there is little in commonbetween the political power setup ofIndia, the largest democracy of theworld which is wedded to a secular anddeeply liberal Constitution for over halfa century, and the authoritarianmilitarist political power structure ofPakistan or the command economy ofChina that has only recently startedmoving towards a more liberalrestructuring.
10.2 DE V E L O P M E N T A L PA T H — ASNAPSHOT VIEW
Do you know that India, Pakistan andChina have many similarities in theirdevelopmental strategies? All the threenations have started towards theirdevelopmental path at the same time.While India and Pakistan becameindependent nations in 1947, People’sRepublic of China was established in1949. In a speech at that time,
Jawaharlal Nehru had said, “these newand revolutionary changes in Chinaand India, even though they differ incontent, symbolise the new spirit ofAsia and new vitality which is findingexpression in the countries in Asia.”All the three countries had startedplanning their development strategiesin similar ways. While Indiaannounced its first Five Year Plan for1951-56, Pakistan announced its firstfive year plan, called, the Medium TermPlan, in 1956. China announced itsFirst Five Year Plan in 1953. Till 1998,Pakistan had eight five year planswhereas China’s tenth five year periodis 2001-06. The current planning inIndia is based on Tenth Five Year Plan(2002-07). India and Pakistanadopted similar strategies such ascreating a large public sector andraising public expenditure on socialdevelopment. Till the 1980s, all thethree countries had similar growthrates and per capita incomes. Wheredo they stand today in comparison toone another? Before we answer thisquestion let us trace the historical pathof developmental policies in China andPakistan. After studying the last threeunits, we already know what policiesIndia has been adopting since itsindependence.
China: After the establishment ofPeople’s Republic of China under onepartyrule, all the critical sectors of theeconomy, enterprises and lands ownedand operated by individuals werebrought under government control.The Great Leap Forward (GLF)
campaign initiated in 1958 aimed atindustrialising the country on amassive scale. People were encouragedto set up industries in their backyards.In rural areas, communes werestarted. Under the Commune system,people collectively cultivated lands. In1958, there were 26,000 communescovering almost all the farmpopulation.
GLF campaign met with manyproblems. A severe drought causedhavoc in China killing about 30 millionpeople. When Russia had conflicts withChina, it withdrew its professionalswho had earlier been sent to China tohelp in the industrialisation process.In 1965, Mao introduced the GreatProletarian Cultural Revolution(1966-76) under which students andprofessionals were sent to work andlearn from the countryside.
The present-day fast industrialgrowth in China can be traced back tothe reforms introduced in 1978. Chinaintroduced reforms in phases. In theinitial phase, reforms were initiated inagriculture, foreign trade andinvestment sectors. In agriculture, forinstance, commune lands were dividedinto small plots which were allocated(for use not ownership) to individualhouseholds. They were allowed to keepall income from the land after payingstipulated taxes. In the later phase,reforms were initiated in the industrialsector. Private sector firms, in general,and township and village enterprises,i.e. those enterprises which were ownedand operated by local collectives, inparticular, were allowed to produce
goods. At this stage, enterprises ownedby government (known as State OwnedEnterprises—SOEs), which we, inIndia, call public sector enterprises,were made to face competition. Thereform process also involved dualpricing. This means fixing the prices intwo ways; farmers and industrial unitswere required to buy and sell fixedquantities of inputs and outputs on thebasis of prices fixed by the governmentand the rest were purchased and soldat market prices. Over the years, asproduction increased, the proportion ofgoods or inputs transacted in themarket was also increased. In order toattract foreign investors, specialeconomic zones were set up.
Pakistan: While looking at variouseconomic policies that Pakistanadopted, you will notice manysimilarities with India. Pakistan alsofollows the mixed economy model with
co-existence of public and privatesectors. In the late 1950s and 1960s,Pakistan introduced a variety ofregulated policy framework (for importsubstitution industrialisation). Thepolicy combined tariff protection formanufacturing of consumer goodstogether with direct import controls oncompeting imports. The introduction ofGreen Revolution led to mechanisationand increase in public investment ininfrastructure in select areas, whichfinally led to a rise in the production offoodgrains. This changed the agrarianstructure dramatically. In the 1970s,nationalisation of capital goodsindustries took place. Pakistan thenshifted its policy orientation in the late1970s and 1980s when the majorthrust areas were denationalisationand encouragement to private sector.During this period, Pakistan alsoreceived financial support from westernnations and remittances from continuously increasing outflow ofemigrants to the Middle-east. Thishelped the country in stimulatingeconomic growth. The then governmentalso offered incentives to the privatesector. All this created a conduciveclimate for new investments. In 1988,reforms were initiated in the country.
Having studied a brief outline ofthe developmental strategies of Chinaand Pakistan, let us now comparesome of the developmental indicatorsof India, China and Pakistan.
10.3 DEMOGRAPHIC INDICATORS
If we look at the global population, outof every six persons living in thisworld, one is an Indian and anotherChinese. We shall compare somedemographic indicators of India,China and Pakistan. The populationof Pakistan is very small and accountsfor roughly about one-tenth of Chinaor India.
Though China is the largest nationamong the three, its density is thelowest though geographically itoccupies the largest area. Table 10.1also shows the population growth as
being highest in Pakistan, followed byIndia and China. Scholars point out theone-child norm introduced in China inthe late 1970s as the major reason forlow population growth. They also statethat this measure led to a decline in thesex ratio, the proportion of females per1000 males. However, from the table,you will notice that the sex ratio is lowand biased against females in all thethree countries. Scholars cite sonpreferenceprevailing in all thesecountries as the reason. In recent times,all the three countries are adoptingvarious measures to improve thesituation. One-child norm and theresultant arrest in the growth ofpopulation also have otherimplications. For instance, after a fewdecades, in China, there will be moreelderly people in proportion proportionto young people. This will force Chinato take steps to provide social securitymeasures with fewer workers.
The fertility rate is also low inChina and very high in Pakistan.Urbanisation is high in both Pakistanand China with India having 28 percent of its people living in urban areas.
10.4 GROSS DOMESTICP R O D U C T A N DSECTORS
One of the muchtalkedissues aroundthe world about Chinais its growth of GrossDomestic Product.China has the secondlargest GDP (PPP) of$7.2 trillion whereasIndia’s GDP (PPP) is$3.3 trillion andPakistan’s GDP isroughly about 10 percent of India’s GDP.
When manydeveloped countrieswere finding it difficultto maintain a growthrate of even 5 per cent, China was ableto maintain near double-digit growthfor more than two decades as can beseen from Table 10.2. Also notice thatin the 1980s Pakistan was ahead ofIndia; China was having double-digitgrowth and India was at the bottom.In the 1990s, there is a marginal
decline in India and China’s growthrates whereas Pakistan met withdrastic decline at 3.6 per cent. Somescholars hold the reform processesintroduced in 1988 in Pakistan andpolitical instability as the reasonbehind this trend. We will study in alater section which sector contributedto this trend in these countries.
First, look at how people engaged indifferent sectors contribute to GrossDomestic Product. It was pointed out inthe previous section that China andPakistan have more proportion ofurban people than India. In China,
due to topographic andclimatic conditions,the area suitable forcultivation is relativelysmall — only about 10per cent of its total landarea. The total cultivablearea in China accountsfor 40 per cent of thecultivable area in India.Until the 1980s, morethan 80 per cent of thepeople in China weredependent on farmingas their sole sourceof livelihood. Sincethen, the governmentencouraged peopleto leave their fieldsand pursue otheractivities such ashandicrafts, commerceand transport. In 2000,with 54 per cent ofits workforce engagedin agriculture, itscontribution to GDP in China is 15 percent (see Table 10.3).
In both India and Pakistan, thecontribution of agriculture to GDP is the same, at 23 per cent, but theproportion of workforce that works inthis sector is more in India. InPakistan, about 49 per cent of peoplework in agriculture whereas in Indiait is 60 per cent. The sectoral share ofoutput and employment also showsthat in all the three economies, theindustry and service sectors have lessproportion of workforce but contributemore in terms of output. In China,
manufacturing contributes thehighest to GDP at 53 per cent whereasin India and Pakistan, it is the servicesector which contributes the highest.In both these countries, service sectoraccounts for more than 50 per centof GDP.
In the normal course ofdevelopment, countries first shift theiremployment and output fromagriculture to manufacturing and thento services. This is what is happeningin China as can be seen from Table10.4. The proportion of workforceengaged in manufacturing in Indiaand Pakistan were low at 16 and 18per cent respectively. The contributionof industries to GDP is also just equalto or marginally higher than theoutput from agriculture. In India andPakistan, the shift is taking placedirectly to the service sector.
Thus, in both India and Pakistan,the service sector is emerging as amajor player of development. Itcontributes more to GDP and, at thesame time, emerges as a prospectiveemployer. If we look at the proportionof workforce in the1980s, Pakistanwas faster in shifting its workforce toservice sector than India and China. In the 1980s, India, China andPakistan employed 17, 12 and 27 percent of its workforce in the servicesector respectively. In 2000, it hasreached the level of 24, 19 and 37 percent respectively.
In the last two decades, the growthof agriculture sector, which employsthe largest proportion of workforce inall the three countries, has declined.In the industrial sector, China hasmaintained a double-digit growth rate
whereas for India and Pakistan growthrate has declined. In the case of servicesector, India has been able to raise itsrate of growth in the 1990s whileChina and Pakistan reduced theirservice sector growth. Thus, China’sgrowth is mainly contributed by themanufacturing sector and India’sgrowth by service sector. During thisperiod, Pakistan has shown
deceleration in all the three sectors.
10.5 INDICATORS OF HUMAN DEVELOPMENT
You might have studied about theimportance of human developmentindicators in the lower classes and theposition of many developed anddeveloping countries. Let us look howIndia, China and Pakistan haveperformed in some of the selectindicators of human development.Look at Table 10.5.
If we compare the indices given inthe Table, you will find that China ismoving ahead of India and Pakistan.This is true for many indicators —income indicator such as GDP percapita, or proportion of populationbelow poverty line or healthindicators such as mortality rates,access to sanitation, literacy, lifeexpectancy or malnourishment.Pakistan is ahead of India in reducingproportion of people below the povertyline and also its performance ineducation, sanitation and access towater is better than India. But neitherof these two countries have been ableto save women from maternalmortality. In China, for one lakh births,only 50 women die whereas in Indiaand Pakistan, more than 500 womendie. Surprisingly India and Pakistanare ahead of China in providingimproved water sources. You willnotice that for the proportion of peoplebelow the international poverty rate of$1 a day, both China and Pakistan arein similar positions whereas theproportion is almost two times higherfor India. Find out for yourself howthese differences occur.
In dealing with or makingjudgements on such questions,however, we should also note aproblem with using the humandevelopment indicators given abovewith conviction. This occurs becausethese are all extremely importantindicators; but these are notsufficient. Along with these, we alsoneed what may be called ‘libertyindicators’. One such indicator hasactually been added as a measure of ‘the extent of democratic participationin social and political decisionmaking’but it has not been given anyextra weight. Some obvious ‘libertyindicators’ like measures of ‘the extentof Constitutional protection given torights of citizens’ or ‘the extent ofconstitutional protection of theIndependence of the Judiciary and theRule of Law’ have not even beenintroduced so far. Without includingthese (and perhaps some more) andgiving them overriding importance inthe list, the construction of a humandevelopment index may be said to beincomplete and its usefulness limited.
10.6 DEVELOPMENT STRATEGIES — ANAPPRAISAL
It is common to find developmentalstrategies of a country as a model toothers for lessons and guidance fortheir own development. It isparticularly evident after theintroduction of the reform process indifferent parts of the world. In order tolearn from economic performance ofour neighbouring countries, it isnecessary to have an understanding ofthe roots of their successes andfailures. It is also necessary todistinguish between, and contrast, thedifferent phases of their strategies.Though different countries go throughtheir development phases differently,let us take the initiation of reforms asa point of reference. We know thatreforms were initiated in China in1978, Pakistan in 1988 and India in1991. Let us briefly assess their achievements and failures in pre andpost reform periods.
Why did China introducestructural reforms in 1978? China didnot have any compulsion to introducereforms as dictated by the World Bankand International Monetary Fund toIndia and Pakistan. The newleadership at that time in China wasnot happy with the slow pace of growthand lack of modernisation in theChinese economy under the Maoistrule. They felt that Maoist vision ofeconomic development based ondecentralisation, self sufficiency andshunning of foreign technology, goodsand capital had failed. Despiteextensive land reforms, collectivisation,the Great Leap Forward and otherinitiatives, the per capita grain outputin 1978 was the same as it was in themid-1950s.
It was found that establishment ofinfrastructure in the areas ofeducation and health, land reforms,long existence of decentralisedplanning and existence of smallenterprises had helped positively inimproving the social and incomeindicators in the post reform period.Before the introduction of reforms,there had already been massiveextension of basic health services inrural areas. Through the communesystem, there was more equitabledistribution of food grains. Expertsalso point out that each reformmeasure was first implemented at asmaller level and then extended on amassive scale. The experimentationunder decentralised governmentenabled to assess the economic, social and political costs of success or failure.For instance, when reforms were madein agriculture, as pointed out earlierby handing over plots of land toindividuals for cultivation, it broughtprosperity to a vast number of poorpeople. It created conditions for thesubsequent phenomenal growth inrural industries and built up a strongsupport base for more reforms.
Scholars quote many such exampleson how reform measures led to rapidgrowth in China.Scholars argue that in Pakistanthe reform process led to worsening ofall the economic indicators. We haveseen in an earlier section thatcompared to 1980s, the growth rateof GDP and its sectoral constituentshave fallen in the 1990s.
Though the data on internationalpoverty line for Pakistan is quitehealthy, scholars using the officialdata of Pakistan indicate risingpoverty there. The proportion of poorin 1960s was more than 40 per centwhich declined to 25 per cent in 1980sand started rising again in 1990s. Thereasons for the slow-down of growthand re-emergence of poverty inPakistan’s economy, as scholars putit, are (i) agricultural growth and foodsupply situation were based not onan institutionalised process oftechnical change but on good harvest.When there was a good harvest, theeconomy was in good condition, whenit was not, the economic indicatorsshowed stagnation or negative trends(ii) you will recall that India had toborrow from the IMF and World Bankto set right its balance of payments
crisis; foreign exchange is an essentialcomponent for any country and it isimportant to know how it can beearned. If a country is able to build upits foreign exchange earnings bysustainable export of manufacturedgoods, it need not worry. In Pakistanmost foreign exchange earnings camefrom remittances from Pakistaniworkers in the Middle-east and theexports of highly volatile agriculturalproducts; there was also growingdependence on foreign loans on theone hand and increasing difficulty inpaying back the loans on the other.
However, as stated in the ‘One YearPerformance of the (Pakistan)Government’ for the year August2004–2005, the Pakistan economy hasbeen witnessing GDP growth at about8 per cent for three consecutive years(2002–2005). All the three sectors,agriculture, manufacturing andservice, have contributed to this trend.Besides facing high rates of inflationand rapid privatisation, the governmentis increasing the expenditure onvarious areas that can reduce poverty.
What are we learning from thedevelopmental experiences of ourneighbours? India, China andPakistan have travelled more than fivedecades of developmental path withvaried results. Till the late 1970s, allof them were maintaining the samelevel of low development. The lastthree decades have taken thesecountries to different levels. India,with democratic institutions, performed moderately, but a majorityof its people still depend onagriculture. Infrastructure is lackingin many parts of the country. It is yetto raise the level of living of more thanone-fourth of its population that livesbelow the poverty line. Scholars are ofthe opinion that political instability,over-dependence on remittancesand foreign aid along with volatileperformance of agriculture sector arethe reasons for the slowdown of thePakistan economy. Yet, in the recentpast, it is hoping to improve thesituation by maintaining high rates ofGDP growth. It is also a greatchallenge for Pakistan to recover fromthe devastating earthquake in 2005,which took the lives of nearly 75,000people and also resulted in enormousloss to property. In China, the lack ofpolitical freedom and its implicationsfor human rights are major concerns;yet, in the last three decades, it usedthe ‘market system without losingpolitical commitment’ and succeededin raising the level of growth alongwithalleviation of poverty. You will alsonotice that unlike India and Pakistan,which are attempting to privatise theirpublic sector enterprises, China hasused the market mechanism to ‘createadditional social and economicopportunities’. By retaining collectiveownership of land and allowingindividuals to cultivate lands, Chinahas ensured social security in ruralareas. Public intervention in providingsocial infrastructure even prior toreforms has brought about positiveresults in human developmentindicators in China.
1. Mention some examples of regional and economic groupings.
2. What are the various means by which countries are trying tostrengthen their own domestic economies?
3. What similar developmental strategies have India and Pakistanfollowed for their respective developmental paths?
4. Explain the Great Leap Forward campaign of China as initiated in1958.
5. China’s rapid industrial growth can be traced back to its reforms in1978. Do you agree? Elucidate.
6. Describe the path of developmental initiatives taken by Pakistanfor its economic development.
7. What is the important implication of the ‘one child norm’ in China?
8. Mention the salient demographic indicators of China, Pakistan andIndia.
9. Compare and contrast India and China’s sectoral contributiontowards GDP in 2003. What does it indicate?
10. Mention the various indicators of human development.
11. Define the liberty indicator. Give some examples of liberty indicators.
12. Evaluate the various factors that led to the rapid growth in economicdevelopment in China.
13. Group the following features pertaining to the economies of India,China and Pakistan under three heads
- One-child norm
- Low fertility rate
- High degree of urbanisation
- Mixed economy
- Very high fertility rate
- Large population
- High density of population
- Growth due to manufacturing sector
- Growth due to service sector.
14. Give reasons for the slow growth and re-emergence of poverty inPakistan.
15. Compare and contrast the development of India, China and Pakistanwith respect to some salient human development indicators.
16. Comment on the growth rate trends witnessed in China and Indiain the last two decades.
17. Fill in the blanks
(a) First Five Year Plan of ________________ commenced in theyear 1956. (Pakistan/China)
(b) Maternal mortality rate is high in _____________. (China/Pakistan)
(c) Proportion of people below poverty line is more in __________.(India/Pakistan)
(d) Reforms in ______________ were introduced in 1978. (China/Pakistan)
1. Organise a class debate on the issue of free trade between Indiaand China and India and Pakistan.
2. You are aware that cheap Chinese goods are available in the market,for example, toys, electronic goods, clothes, batteries etc. Do youthink that these products are comparable in quality and price withtheir Indian counterparts? Do they create a threat to our domesticproducers? Discuss.
3. Do you think India can introduce the one-child norm like China toreduce population growth? Organise a debate on the policies thatIndia can follow to reduce population growth.
4. China’s growth is mainly contributed by the manufacturing sectorand India’s growth by the service sector—prepare a chart showingthe relevance of this statement with respect to the structuralchanges in the last decade in the respective countries.
5. How is China able to lead in all the Human Development Indicators?Discuss in the classroom. Use Human Development Report of the latest year.