Comparative Development Experiences of India and its Neighbours — notes

Comparing neighbours is fair because they share history, geography and similar problems. Around 1950 India, Pakistan and China were all poor, mainly agricultural economies with low incomes.

• New nations: India and Pakistan 1947; People's Republic of China 1949.
• First five-year plans announced: India 1951, China 1953, Pakistan 1956.
• Major reforms began: China 1978, Pakistan 1988, India 1991.

Countries in the region also cooperate through groupings such as SAARC (set up in 1985).

• Mixed economy after 1947, with planning (first plan announced 1956).
• Late 1950s–1960s: import substitution: consumer-goods industries behind tariff protection.
• 1960s: the Green Revolution raised food-grain output; farming was mechanised and the state invested in infrastructure in some regions.
• 1970s: nationalisation of capital goods industries.
• Late 1970s–1980s: denationalisation and encouragement to the private sector, supported by financial help from Western countries and remittances from emigrant workers, many in West Asia.
• 1988: economic reforms began after a financial crisis.

Why growth was uneven: farm output depended on the weather; foreign exchange came largely from remittances and foreign aid, not from a growing base of manufactured exports; and political instability made long-term policy difficult. In both India and Pakistan, services became the largest sector of output.

• 1949: People's Republic set up; important sectors brought under state direction; first plan 1953.
• Great Leap Forward (1958): a campaign to industrialise on a massive scale; people set up backyard industries (for example small steel furnaces); in rural areas communes farmed land collectively.
• Setbacks: a severe famine, linked to drought and to the campaign's own policies, in which a very large number of people died; a conflict with the Soviet Union led to the withdrawal of Soviet experts.
• Great Proletarian Cultural Revolution (1966–76): students and professionals were sent to work and learn in the countryside.

Even so, the pre-reform years spread basic education and health care widely and built some rural infrastructure, a base that helped later growth.

Reforms came in phases. The first phase covered agriculture, foreign trade and investment; the later phase covered industry.

• Agriculture: commune land divided into plots for households; each family paid the taxes fixed by the government and kept the rest, so effort was rewarded.
• Industry: private firms and township and village enterprises (owned by local collectives) were allowed to compete with state-owned enterprises, pushing all of them to be efficient.
• Dual pricing: a quota sold to the state at fixed prices, anything above it at market prices.
• Special economic zones: coastal areas with good facilities and freer rules to attract foreign direct investment and promote exports.

The result was rapid, manufacturing-led growth.

Population (broad patterns):

• China introduced the one-child policy in the late 1970s (from about 1979). Population growth slowed sharply; after a few decades the share of elderly people rose (ageing) and the policy was later relaxed.
• The sex ratio (females per 1,000 males) is low and biased against females in all three countries; son preference is one cause.
• India and Pakistan have younger populations that still grow faster than China's.

Output and sectors:

• China: growth led mainly by manufacturing; a large, fast movement of workers out of agriculture.
• India and Pakistan: services are the largest and fastest-growing sector of output, while agriculture still employs a large share of workers.

Useful calculations: growth rate = change ÷ original × 100; per capita income growth ≈ GDP growth − population growth; density = population ÷ area; sex ratio = females ÷ males × 1,000.

• On most human development indicators (life expectancy, literacy, income per head), China is ahead of India and Pakistan; India and Pakistan are close to each other, each ahead on some indicators.
• A main reason for China's lead is its early spread of health care and primary education.
• Limits: these indices do not measure liberty (political and civil freedoms, protection of rights) or how fairly gains are shared; some economists suggest liberty indicators.

Appraisal: China achieved the fastest growth but faces ageing and a low sex ratio; India grew steadily, led by services, with many workers still in farming; Pakistan raised food output and services but depended on remittances, aid and the weather. Lessons: invest in people, link reward to effort, build a broad export base, keep policy stable.