Alas, India Has Fallen Behind China By Another Half-Decade
Buoyed by India’s ‘jump-start liberalisation’ in the early 1990s, I wrote how we were “merely lagging China by a decade”. To amplify, China had become a trillion-dollar economy in 1998, and India hit that mark in 2007. Even more remarkably, India had begun to grow faster than China on a key parameter – remember, in those go-go years of high inflation and high growth, our nominal GDP was tearing away at 13-15%, while a debt-laden China was staring at single digits. My hypothesis was simple (and rather ‘simplistic’ in hindsight): India would reform aggressively to become productive, tame inflation, and streak ahead of China in real terms too. However, that never happened.
So now, if we re-calibrate our ‘inter-se time lag’ China crossed $3 trillion dollars in 2006, while we would have (without Covid-19) done it this year – unfortunately, the ‘mere one-decade lag’ has now become a ‘fifteen-year lead’ for China. Clearly, they’ve raced ahead of us by another half-decade, while we have been standing still (on a relative scale). Worse, China’s lead is accelerating since we are lumbering behind on both nominal and real GDP growth now.