What if India was the China of today? | by Vidushi | June 2022
What if India’s PMF was agriculture, not industry?
IIndia and China – These two names come up regularly in the news, often in connection with each other. Often at odds with each other over border disputes, these neighboring countries have many similarities in their history. For example, the two countries were at one time home to two of the oldest civilizations in the ancient world. Extremely rich in natural resources, these two countries have always been the favorites of traders and colonialists.
Apart from this, India and China gained political independence around the same time in the late 1940s, with their demographics at the time comprising mostly farmers and farmers. During the same period, both of their industries were severely underdeveloped and the vast majority of their citizens were unemployed. Also, after independence, the rulers of both countries preferred non-capitalist forms of economic systems for their countries, viz. socialism and communism, on a configuration of laissez-faire.
However, despite so many similarities in their histories, the pace at which the two countries grew after independence couldn’t be more different. While India’s GDP growth rate in 1994 was 6.4%, China’s was 13%. Another example that highlights the differences is the fact that in 2010, when India held a 2.7% share of global manufacturing output, China was already the the largest manufacturer in the worldwith a part of 19.3%.
But what is the reason for their contrasting growth rates? Experts believe that the main reason for this difference was that China chose agriculture as its main driving force (PMF), while India chose industry. This decision alone by their respective leaders is touted as the main reason why China is now a $14.7 trillion economy, while India lags behind, with a GDP relatively below $2. $66 trillion.
An avid alternative history reader, today I will try to paint a picture of the growth and progress that the Indian economy might have had, if they had chosen agriculture as their MFP and not industry.
The country’s limited capital would have been directed to agriculture, which was a low-investment activity, rather than high-investment industries like steel and thermal power plants. The money could have been used to create several small self-sufficient factories that would produce agricultural products. tools needed for farming. All the surplus labor would be trained to work in these factories, which would create jobs and also build the base of industries in the future. In this way, India would have to take much smaller loans from international financial institutions, which would significantly reduce its debts and improve its balance of payments from the beginning.
By abolishing high taxation systems like the “Zamindari system”, taking stock of agricultural resources and mobilizing farmers at the lowest levels, that is. the villagers, the government would facilitate the financial independence of the villagers much earlier. Their families’ excess income and savings would be saved in the banks, thereby increasing the money in the market.
The Panchayat system that’s to say. a three-tier system of village local self-government in rural India, was reportedly established as a priority, accepting the recommendations of the Balwant Rai Mehta Committee for the same, in 1957. This decentralization, which was finally achieved in 1992 after years of stalling, would have resulted in access to health, security and housing for all Indians nearly four decades earlier.
Cooperatives and agricultural finance institutions would be established as a priority, giving farmers access to cheap loans at low interest rates. Prompt crop insurance and fertilizer subsidies would further incentivize farmers to expand their operations. Promoting organic farming and using local and sustainable fertilizers such as cow dung, which was already widely used, would further reduce ancillary costs, further benefiting farmers.
An early focus on agriculture would have reduced poverty across the country. The poorer sections of Indian society, ie. the farmers would have been the first to have an income and a means of subsistence. This would guarantee them a good standard of living in the villages thanks to which fewer workers would migrate to the cities in search of work. This would significantly reduce the pressure on urban jobs and land resources, and a better and more balanced quality of life would be achieved for all.
By opening up the economy earlier and trading with foreign countries, India is said to have achieved the dual goals of improving trade relations and preventing the balance of payments (BOP) crisis it faced at the end. of the 1980s.
To avoid a collapse of its economy during the balance of payments crisis, India had to radically change its foreign policy and devalue its currency, in accordance with the directives of the International Monetary Fund (IMF). This could have been avoided if India had started trading earlier, using surplus agricultural products. The money thus earned could have been used to import machinery and all other equipment which would compel India to build great industries.
After securing financial stability and the well-being of its people by using agriculture as an MFP, India could have focused on industrialization and continued to grow. China practiced this switch of PMF from agriculture to industry in the early 1980s, and after realizing that its industries were not developing, India also did the same. However, this was done in 2003, decades after China.
Despite what seems like an overwhelming number of reasons to choose agriculture over manufacturing for its MFP, India has chosen manufacturing. Experts believe the reasons are:
- During the period following World War II, defense and security were a priority over everything else for nations around the world. At that time, building a solid industrial base for a robust defense system was a priority for countries around the world.
- It was believed that industrialization was the fastest way to achieve high growthand has been highlighted by the World Bank and the IMF.
- Countries that chose agriculture as their MFP were considered asby the World Bank and the IMF. This perspective changed significantly in the 1980s, after economists observed China’s phenomenal growth using agriculture as an MFP.
Starting from the past, it is important to remember that the purpose of analyzing history is to learn from it, not to dwell on it or blame people for it. Although the ideal situation would have been for India to also start with agriculture as an MFP and then move on to manufacturing, this was not to be the case. India’s rulers learned from the mistakes of its past and incorporated the necessary changes into their economic system. The IMF-led LPG reforms are the result.
Today, India is one of the largest economies in the world. It’s the world the biggest nation producing pulses and milk, and the second biggest steel producer. In the pharmaceutical industry (by volume), mobile market and refinery production, it ranked in the top three countries. In addition, India also has the world the biggest railway network in terms of passenger traffic, and the the biggest renewable energy expansion plan.
India is set to become “one of the biggest engines of growth in the world”, according to a report by the McKinsey Global Institute (MGI). In 2018 before the Covid-19 pandemic, India’s economy grew by 6.1%, while, on the other hand, the The US economy grew by 3%. Superior technology, better ease of doing business and easier FDI routes have made India a top choice for investment, and according to the Center for Economics and Business Research (CEBR), India should become the third largest economy worldwide per year 2031ranking ahead of developed countries such as Japan and the United Kingdom.
Even during the pandemic, India has taken unprecedented steps both in terms of scale and scope. India’s national COVID-19 vaccination campaign is the the largest vaccination campaign in the world and India is about to get closer to the administration 2 billion doses of Covid vaccination in a record time. Apart from this, Mission Sagar organized by her has provided vaccines and humanitarian aid to several countries around the world. This includes over 3,000 tonnes of food, over 300 tonnes of LMOs, 900 oxygen concentrators and 20 ISO containers.
India’s sense of responsibility towards its citizens and its diaspora is reflected in the fact that all 10 best spots for the biggest warzone evacuations in the world, including the phenomenal Kuwait Airlift, are owned by India. The most recent of these is “Operation Ganga II”, the largest evacuation of the war zone between Ukraine and Russia, during which India brought 17,000 of his students stranded at home.
India’s future is bright and vibrant, with the country passing several milestones every day in the areas of defence, nuclear technology and space explorations, among others. Despite a rough start, India is showing steady growth, somewhat similar to the rise of Japan and China in the 20th century. Although India liberalized its economy several years after its neighbors in Southeast Asia, it is growing rapidly and is currently on its way to becoming one of the largest economies in the world.