Washington, Oct 7 (Calcutta Tube) India will soon start to outpace China, thanks to a young and growing workforce and its ‘much-derided democracy’ says The Economist.
The cover story on ‘How India’s growth will outpace China’s’ in its latest issue attributes ‘India’s surprising economic miracle’ largely to its private sector saying, ‘the country’s state may be weak, but its private companies are strong.’
Despite the poor headlines generated in the run up to the Commonwealth games, ‘India is doing rather well,’ the internationally regarded magazine said noting, ‘Its economy is expected to expand by 8.5 percent this year.’
‘It has a long way to go before it is as rich as China – the Chinese economy is four times bigger- but its growth rate could overtake China’s by 2013, if not before.
‘Some economists think India will grow faster than any other large country over the next 25 years. Rapid growth in a country of 1.2 billion people is exciting, to put it mildly,’ it said.
Citing demography as one of the two reasons why India will soon start to outpace China, the magazine noted ‘China’s workforce will shortly start ageing; in a few years’ time, it will start shrinking.’
‘That’s because of its one-child policy – an oppressive measure that no Indian government would get away with.’
‘India is now blessed with a young and growing workforce. Its dependency ratio – the proportion of children and old people to working-age adults – is one of the best in the world and will remain so for a generation,’ it said.
India’s economy will benefit from this ‘demographic dividend’, which has powered many of Asia’s economic miracles.
‘The second reason for optimism is India’s much-derided democracy,’ said The Economist noting, ‘Indian capitalism is driven by millions of entrepreneurs all furiously doing their own thing.
‘Since the early 1990s, when India dismantled the ‘licence raj’ and opened up to foreign trade, Indian business has boomed.’
‘Ideas flow easily around India, since it lacks China’s culture of secrecy and censorship. That, plus China’s rampant piracy, is why knowledge-based industries such as software love India but shun the Middle Kingdom,’
‘Given the choice between doing business in China or India, most foreign investors would probably pick China, The Economist said. ‘But as the global economy becomes more knowledge-intensive, India’s advantage will grow.’