INDIA AND CHINA
Comparing the Incomparable
Contents
List of Tables List of Figures Foreword Preface
Acknowledgements Introduction
Why India?
Drivers for Future Growth Structure of the Book
Parti
PARAMETERS FOR USUAL COMPARISON China's Stronghold
FDI: Is it a Panacea?
Understanding the Gap Between FDI in India and China FDI is Not a Panacea
Future of FDI in India Conclusion
Appendix
Glittering Cities: What Lies Beneath?
Understanding the Rise of Cities in China Costs Attached to Development
Cities: Tools to Showcase a 'Developed China' Conclusion
ix xi xiii xix
XXV
xxvii xxviii xxxi
XXXV
3 4 12 14 15 15 17 19 21 27 28
vi Contents
3. GDP Growth: Can India Catch Up? 29 China's Model of Investment-Led Growth
May Not be Sustainable 30 Has China Grown at such a Rapid Pace? 36 The Future Seems Brighter for India 39 GDP is Not a Perfect Indicator of Development 41 Conclusion 44 4. Booming Exports: What Fuels China's Export Engine? 45 Chinese Exports Face Some Challenges 48 Where Does India Stand? 52
Part II
CAN INDIA OVERTAKE CHINA?
India's Distinctive Advantages 5. The Demographic Effect: Past Failure is Equal to
Future Success? 57 Population Control Measures in India and China 60 Demographics are in India's Favour 63 Old is Not Always Gold 65 Conclusion 67 6. Sturdy Private Sector: India's Answer to FDI 68 Advantage India! 69 China's Private Sector is Much Smaller 71 Private Companies: A Comparison 73 China's SOE Problem 76 Conclusion 78 7. Sound Capital Market: Foundation of
the Financial Sector 79 The Importance of Capital Market-Led Growth 79 Indian and Chinese Stock Markets: A Comparison 80 Is the Current Growth for Real? 87 Role of the Hong Kong Stock Exchange 88 Conclusion 90 Appendix A 90 Appendix B 92 8. India's Soft Infrastructure vs China's Hard
Infrastructure
Human Capital and Higher Education Legal System
Corporate Governance
Contents vii
Freedom of the Media 101 Conclusion 102 Appendix 103
Part III
IMPEDIMENTS TO INDIA'S GROWTH Can India Falter in Turning its Dream into Reality?
9. Crumbling Infrastructure 109 Infrastructure: A Major Bottleneck 110 The Road Ahead 113 10. Inefficient Tax System 115 11. Inept Bureaucracy 118 Bureaucracy: Hampering India's Growth 118 Inadequate Reforms 121 Conclusion 121 12. Ballooning Fiscal Deficit 122
High Fiscal Deficit is Affecting the Productivity
of the Country 122 But Fiscal Deficit is Not Likely to Lead to a
Financial Crisis in the Short Term 123 The Way Forward 125 Conclusion 127 Lessons for India 127 Lessons for China 128 Two Different Models of Growth 129 The Future Beckons India and China 130
APPENDIX
Is the Chinese Currency Undervalued? 135 History of the Yuan 136 Indicators of Undervaluation of the Chinese Currency 136 Implications of High Reserves 138 Does China Need Such a High Level of Forex Reserves? 139 Why China Should Revalue Its Currency? 140 Pressure on the Chinese Government to Revalue 141 The Yuan Since 2005 143 Conclusion 144 Notes 145
