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The Economic Growth Trajectory of India and China

Depending on which perspective you choose, the decades since 1978 have been either the best of times or the worst of times for India and China.

Par Nikhil Prasad Ojha and Madhur Singhal

First published on mars 21, 2016
min


This article originally appeared on Livemint. A regular feature in almost every global journal and publication has been a comparison of India's slow economic growth and, until recently, China's rapid progress. Yet, in 1978, both countries had similar living standards. As things stand, it is undoubtedly a tale of two cities. Depending on which perspective you choose, the past decades have been either the best of times or the worst of times for the Asian neighbours. Proponents of India talk of the democratic and inclusive nature of the country's growth while ignoring the slow pace of change. China's backers point to unprecedented poverty eradication, urbanization and infrastructure improvements while ignoring the social and environmental costs these efforts have incurred. At least in the popular press, one aspect of the story that receives less attention is the individual starting points of the two nations. China's economic reforms started with Deng Xiaoping's fang-shou ('letting go' and 'tightening up') efforts between 1978 and 1989. The reforms then accelerated in a sustained manner-be it the Family Responsibility System that transformed agriculture, the opening up of the industrial sector for the growth of local enterprises, or the substantial effort to make state- owned enterprises more efficient. Read the full article in Livemint. Nikhil Prasad Ojha is a partner with Bain & Co. India and the co-editor of the Mint-Bain series on 25 Years of Reforms. Madhur Singhal is a partner with Bain & Co., a leader in the firm’s private equity practice and a member of Bain India’s Technology, Media and Telecommunications and Strategy practices.

This article originally appeared on Livemint.

A regular feature in almost every global journal and publication has been a comparison of India's slow economic growth and, until recently, China's rapid progress. Yet, in 1978, both countries had similar living standards.

As things stand, it is undoubtedly a tale of two cities. Depending on which perspective you choose, the past decades have been either the best of times or the worst of times for the Asian neighbours.

Proponents of India talk of the democratic and inclusive nature of the country's growth while ignoring the slow pace of change. China's backers point to unprecedented poverty eradication, urbanization and infrastructure improvements while ignoring the social and environmental costs these efforts have incurred.

At least in the popular press, one aspect of the story that receives less attention is the individual starting points of the two nations. China's economic reforms started with Deng Xiaoping's fang-shou ('letting go' and 'tightening up') efforts between 1978 and 1989.

The reforms then accelerated in a sustained manner-be it the Family Responsibility System that transformed agriculture, the opening up of the industrial sector for the growth of local enterprises, or the substantial effort to make state- owned enterprises more efficient.

Read the full article in Livemint.

Nikhil Prasad Ojha is a partner with Bain & Co. India and the co-editor of the Mint-Bain series on 25 Years of Reforms. Madhur Singhal is a partner with Bain & Co., a leader in the firm’s private equity practice and a member of Bain India’s Technology, Media and Telecommunications and Strategy practices.