India Simply Not in China's League, Says Former Indian Chief Economic Adviser

Shankar Acharya, former Chief Economic Adviser to the Government of India, puts it bluntly: as an economy, India is simply not in China's league. Phrases like the two Asian giants have become commonplace. "All this has stroked fragile Indian egos no end," he says. "It may even have fooled a lot of people into actually believing all this hyperbole. It's time for a cold dash of reality and a few comparative numbers..."

Using a wide array of statistics such as the following, Shankar argues that India is nowhere close to being near China:

• Per-capita GDP growth (twice that of India)
• Average per-capita income better
• Per-capita GNP better
• China's poverty ratio less than half of India's 35%
• Female adult literacy nearly double India's "pathetic" 45%
• Average life expectancy 8 years higher than that of India
• Rate of malnutrituion in children under 5 years, one quarter that of India
• Electricity production 3 times higher than India
• Freight hauled on railways is 4.5 times higher
• Freight flown via air is 10 times higher
• Container traffic through ports is 16 times higher
• Number of landlines and mobiles 6 times higher
• Merchandise exports 7 times higher
• Foreign direct investment 10 times higher

He speculates about why China's GNP then is only 1.7 times that of India's:

Perhaps it has something to do with the fact that PPP price "corrections" are much higher in the non-traded services sectors than in traded sectors of agriculture and manufacturing. And services account for well over 50 per cent of India's GDP and only a third of China's.

Thus, possibly, in the purchasing power parity methodology for arriving at internationally comparable prices, India's larger services share "enjoys" greater upward price adjustments relative to China's, thus damping the disparity in GNP (total or per capita) actually existing between the two countries.

[Rediff]