INDIAN ECONOMIC DEVELOPMENT
Chapter 10
Comparative Development Experiences of India and its Neighbours
For a country it is very important to know the development policies and strategies followed by its
neighbouring countries. Experiences is of neighbouring countries help a country to later analyze
its own strengths and weaknesses. It would therefore be useful to attempt a comparison of
development experience of India with Pakistan and China.
Development strategies of India, China, Pakistan
Similarities in the development strategies of India, China and Pakistan
1. They started their development strategies at the same time. Indian and Pakistan became
independent in 1947, while republic of China was established in 1949.
2. India, China and Pakistan started their development strategies in similar ways. India
announced its 5-year plan in 1951, Pakistan announced its 5-year plan called the medium
term development plan in 1956.China announced it’s first 5-year plan in 1953.
3. All the three countries had similar growth rates and per capita income till 1980s.
4. Economic reforms took place in all the three countries. Reforms started in India in 1991
in China in 1978 and in Pakistan in 1988
Differences in development strategy
1. Indian and Pakistan are democracies, while China is communist single party system.
2. Both India and Pakistan followed a mixed economy approach. On the other hand, China
followed an approach where the government has a central role in all decisions making.
Development strategy of China
1. Great leap forward - Communist China or the People’s republic of China, as it is officially
known came to being in 1949. There is only one party i.e. The communist party of China that
holds power in China. All the sectors of economy including various enterprises and land owned
by individuals was brought under government control. A program called ‘The Great Leap
Forward ’was launched in 1958. It aimed at industrializing the country on a massive scale.
People were encouraged to set up factories at their back yards. In rural areas commune
cooperatives were set up. Commune cooperative system means that people collectively
cultivate land.
2. Great Proletarian cultural revolution- In 1965 Tse Mao Tung started a cultural
revolution. In this revolution students and professionals were sent to work and learn in
rural areas.
3. Reforms in 1978 - Starting in 1978, several reforms were introduced in various phases in
China. First agriculture foreign trade and investments sectors were taken up. Commune
lands were divided into small plots. These were allotted to individual households for
cultivation. However, the household sector did not get the ownership rights of these
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farms. They could keep income from these farms after paying taxes. In the next following
stage reforms were expanded to industrial sector.
Private firms were allowed to set up manufacturing units. The local cooperatives and
private firms were allowed to produce goods and services. This meant competition
between newly sanctioned private sector and the old government owned units this reform
in China caused dual pricing. Dual pricing means fixing the prices in two ways-
(a) Farmers and industrial units were required to buy and sell fixed quantities of inputs
and outputs on the basis of prices fixed by the government. (Government administered
price)
(b) The rest were purchased and sold at market prices.
4. In order to attract foreign direct investments Special Economic Zones were set up. A SEZ
is a geographical region that has economic laws different from a country’s typical
economic laws. SEZ offer comprehensive infrastructural facilities to attract FDI.
Development strategy of Pakistan
1. Pakistan followed a mixed economy system where both public and private sector
coexisted.
2. In late 1950s and 60s Pakistan introduced a variety of regulated policy framework. The
policy combined tariff protection and direct import control(quotas).
3. 1970’s nationalization of capital good industries took place in Pakistan.
4. In 1988 reforms were introduced. The main areas were denationalization and
encouragement to put sector.
5. Pakistan received financial support from Western Nations and remittances from Middle
East. It helped in raising the economic growth of Pakistan.
6. The introduction of green revolution led to mechanization of agriculture-Increase in
investments in agricultural capital finally led to rise in the production of food grains.
Comparative study of 3 countries
A. Demographic parameters
1. In terms of population China is ranked first and India second with the population of about
141 crores and 139 crores in 2021 respectively. Pakistan’s population in 2021 was
estimated at about 23 crores and is ranked 5th in the world.
2. In the year 2018 density of population in China was around 148 persons per square
kilometers, while that of India is about 455 persons per square kilometers. Pakistan has a
density of about 275.
3. In the year 2018, Fertility rate is highest in Pakistan i.e. 4 children per women, it is
around 2 for India and about 2 (round off) for China.
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4. In the year 2018 Urbanization is high in China (59) followed by Pakistan (37) and then
India (34)
5. Annual growth rate of population in China in the year 2018 was around 0.5%, for India it
was around 1% and for Pakistan it was around 2% for the year 2018.
B. Employment and Output
Occupational structure and growth - A well-known fact about change in occupational
structure and economic growth is that as growth takes place percentage of labour force
working in agriculture sector declines while in other sectors increases.
SECTORS Contribution to GDP Distribution of Workforce
India China Pakistan India China Pakistan
Agriculture 16 7 24 45 26 41
Industry 30 41 19 24 28 24
Services 54 52 57 31 46 35
Total 100 100 100 100 100 100
In China only about 26% of the population is engaged in agriculture while about 45% of
the work force in India depends on agriculture and about 41% in Pakistan. For China
industrial sector absorbs about 28% of the workforce while this is 24% for India as well as
Pakistan. Service sector absorbs about 46% of Chinese workforce while for India it is
about 31%and for Pakistan is 35%.
The contribution of agricultural sector to GDP for China is around 7%. Industrial
contribution to GDP is about 41% while services contribute about 52% in GDP. As far as
India is concerned agricultural sector contributes about 16% while industrial sector
contributes about 30% and the contribution of service sector in GDP for India is about
54%.
Pakistan’s agriculture contributes about 24% to its GDP while industries and service
sector contribute about 19% and 57% respectively.
C. Human development index
Human development index uses three basic dimensions of human life. i.e. Long and
healthy life measured by life expectancy, access to knowledge as measured by mean
(average) years of schooling and the decent standard of living which is generally measured
by GNP per capita. It is calculated by UNDP (United Nation Development Programme)
As far as China, Indian and Pakistan are concerned China in 2018 ranked 85th in HDI.
India had an HDI rank of 129, the worst performance was that of Pakistan, it was ranked
152 in 2018.
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