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India
OpinionComment
David Dodwell
David Dodwell

Outside In | Forget world domination, India won’t catch up with China any time soon

  • Even the most India-positive forecasts expect it to spend half a century to overtake the US economically, to take second place behind China
  • India’s policymakers should focus instead on opening up their economy and recognising that it can still be a huge driver in the global economy

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Narendra Modi, India’s prime minister, speaking at the Independence Day ceremony at Red Fort in New Delhi on August 15. Photo: Bloomberg
David Dodwell
Last year, as Prime Minister Narendra Modi celebrated 75 years of India’s independence from British rule, he called on the nation to “dominate the world”. Earlier this week, once again at the Red Fort, he evoked “Amrit Kaal” – a crucial era when the gates of opportunity open.
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His “reform, perform, transform” mantra involves dreaming big. He was possibly dreaming of those halcyon days up to 1870 when India and China counted as the world’s two largest and most powerful economies.

But a dream does not make a plan. And in the nine years since Modi came to power, his plans to propel India to the top table of the world’s most powerful economies remain largely that – plans.

Harvard University’s Graham Allison reminded us in a recent Foreign Policy report that about a decade ago, the late Singapore leader Lee Kwan Yew had said India would never catch up with China and would always remain “the country of the future”. Lee said: “Do not talk about India and China in the same breath” – throwing the gauntlet down to those who see India biting at China’s heels and cheer India on in hopes of hobbling China’s ascent.

To be fair to Modi, his government’s economic performance is respectable after decades of stagnation and disappointment. India’s gross domestic product has grown by about 6 per cent every year on average since 2014, reaching an all-time high of 9.1 per cent last year – impressive in light of the upheavals of the Covid-19 pandemic and recession in many parts of the world.

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But a wide range of structural reforms are needed if India is to escape the shackles of its economic past. These include the grip of caste, bureaucratic friction, impenetrable tax rules, still-chronic protection of local business magnates and import tariffs that are among the world’s highest.
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