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India, China: Poles apart - Views on News from Equitymaster
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  • Mar 14, 2001

    India, China: Poles apart

    After a decade of reforms, India has little to show for itself. Indeed, to the local population, ‘change’ has greatly improved the standard of living. But on a global level, we are yet on the starting block.

  • India & China: No surprises here

    Yes, by global, we refer to China. The general talk is ‘China is happening. India has yet to walk its talk.’ Indeed the numbers clearly support this view. China has grown rapidly over the last two decades. And it continues to do so. Infact, even after twenty years of heady growth, the country is projected to grow at 9 – 10% levels for another 15 years. India, on the other hand, is still growing at 6% - 7% levels. Talk of higher growth levels (10 – 12%) is limited to public rallies.

    Take for example the penetration of communication equipment and personal computers. China is way ahead on all four counts. What’s worrying is that even on a much larger base, the growth rates in China are much higher than those in India.

    Year 2000, per '000 population India China
    Telephone main lines 30 110
    Mobile phone lines 3 54
    Internet users 4 16
    PCs 5 10

    The reasons for this sharp difference are obvious. The sentiment pertaining to communist China is still better than that for democratic India. Take foreign direct investment (FDI) for example. In FY00, India attracted FDI of just over US$ 2 bn. China on the other hand witnessed an inflow of approximately US$ 40 bn. This inflow is essential as along with the money there is an inflow of technology, which again has several benefits attached to it.

    Let’s take the case of mobile telephones. India today boasts over 2 million mobile telephone users. China on the other hand added 42 million users last year alone. One of the reasons for this is that the cost of usage in China is a fraction of that in India.

    In case of fixed line telephony too the picture is equally alarming. The total fixed line telephony connections in the country are approximately 26 million. China, meanwhile, added 30 million users in year 2000!

  • China: The solution to India’s telephony problems

    Okay, given that China has a ten-year lead over India. But as things look now, there is little reason to believe that demand will just explode as it has done so in China. And this is largely due to the policy environment in which we operate. The ‘babus’ in the government need to understand that it is not how well we have done in relation to our past but how we compare with other global leaders. Until then, the gap between China and us will continue to grow.



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