How far will India go to be a manufacturing power?
- By Sun Xingjie
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E-mail China.org.cn, September 20, 2015
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[By Jiao Haiyang/China.org.cn] |
Recently, Indian Prime Minister Narendra Modi has been experiencing hard times. Economic growth has slowed down while economic reform is under great pressure.
Due to reform of the State-owned enterprises, a general strike brought thousands of workers onto the streets. Certainly, the Indian economy contains enormous potential, but the question is how to tap it efficiently.
India is a manufacturing power needing all-round reform. The development path initiated by Modi actually is a copy of the East Asian mode that has to be supported by strong and development-oriented government if it is to succeed.
Competing with China has become a dynamic of the country's development and reform. Last year, the government changed its GDP statistical method, creating a much higher rate of economic growth. In Q1 of this year, the rate surpassed China to reach 7.5 percent. But in Q2, India again fell behind as the rate of 7 percent was lower than the expected 7.4 percent.
India's real challenge is to surpass China in its annual GDP growth rate. China's GDP reached US$10 trillion, while India has only one-fifth that figure. China's foreign exchange reserves are 10 times more than India's. China and India stand at different development levels, creating differing problems for each.
The priority for the Chinese economy at present is to improve the quality of growth and raise its ranking in the global industrial chain.
India has to create a more complete industry production system, and attract more young adults into the industrial sector. In the near future, the population of India will overpass China, and India's age structure is younger than that of China. In order to avoid demographic dividend turning to demographic bomb, the government must guide more of the labor force into industry. That's the reason why Modi initiated a "Made in India" project after he took office.
From Gujarat to New Delhi, Modi dreams of turning India into a manufacturing power. He has attracted investment with a total value of more than US$100 billion. In diplomacy, Modi's charisma has won lots of opportunities for the Indian market. To implement the investment projects, however, the government has to become market friendly. But Modi's reform faces some resistance.
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