(a) India's domestic economic situation
India as a world's fourth largest army, the eighth largest manufacturing industry and the world's second most populous country after the United States of America's high-tech human resources, is to create the myth of the "Rise of India". The Indian government in the "Tenth Five-Year Plan", the 2002-2007 economic growth rate set at 8%, but based on India's heavy population burden, unbalanced industrial structure, huge fiscal deficits, the wide gap between rich and poor, backward infrastructure, high non-performing assets of the banks As well as the domestic caste system and religious conflicts persist and other realities of analysis, the realization of this goal is quite difficult.
1. India's domestic economic development situation in general
India's economy since independence to the 1980s, the average annual growth rate of GDP was only 3.5%, the 80's up to 5.6% in the mid-90's for 7%, in the fourth quarter of 2003, the growth rate is more than the China, a record 10.4%. 2004-2005 fiscal year, the second quarter of the economy, the growth rate of 10.4%, a record 10.4%. -Economic growth in the second quarter of FY2005 was 6.6%, with construction growing at 5.2%, industry at 9.3%, and the tertiary sector at 8.25%. Merchandise trade grew by 53.5% in the second quarter, more than double the 24.6% growth in the first quarter, while foreign direct investment grew by 26.8%, the Indian economy has entered a "golden age".
(1) Primary industry status: "Green Revolution" to increase agricultural production and income, but science and technology to promote agriculture is still a long way to go.
Today's India has completely changed the "with a begging basket" image, food production from the beginning of independence of 15 million tons to 220 million tons in 2003, 2004-2005 (July to June) the food production target of 2251 million tons. million tons but production is expected to decrease to 206 million tons due to declining rainfall. India now ranks among the world's top producers of many agricultural commodities such as rice, wheat, pulses, cotton, sugarcane, tea, tobacco and jute. This is mainly due to the "Green Revolution" carried out in India in 1964-1970, and the "White Revolution" and "Blue Revolution" carried out in India after the 1990s. The "White Revolution" and the "Blue Revolution" in the 1990s boosted livestock and fisheries. India is now on track to double its food production by 2010, when the food market is expected to exceed 2,500 billion roubles. But objectively speaking, India's agricultural productivity is still very low, 1.7 tons per hectare of food production per unit area is still far from the world level of 2.6 tons and more than 5 tons of developed countries. Therefore, in 2005, the Indian government in the budget report particularly emphasized the need to improve the investment environment in the field of agriculture, including allowing domestic agricultural exporters to import seeds and agricultural materials duty-free. The key to India's agricultural development is to reclaim wasteland, selecting and breeding good seeds, transforming agricultural infrastructure, building a network of water conservancy facilities to increase the irrigated area, to ensure the supply of electricity, improve the capacity of food processing and storage, and improve the circulation of food market links, so that the agriculture to take the road of sustainable development.
(2) The current situation of the secondary industry: emerging industrial strength is gradually strong, but the coordinated development should not be ignored.
India has now established a relatively complete industrial system, including pharmaceuticals, automobiles and other fields in the international market competitiveness is strong. India's energy industry (including coal, oil and electricity) is also developing rapidly, coal is India's first energy source, accounting for more than 40% of the national commodity energy consumption. However, the supply of electricity is still very tight, and India is now seeking to develop power generation using bagasse as raw material to further supplement the shortfall in the supply of traditional coal power generation. Light industry plays an important role in Indian industry, its output value accounted for more than 20% of the total industrial output value, mainly for the textile industry and food industry, of which sugar, tea and textile production occupies an important position in the world. With the development of the industry as a whole, the dominance of the traditional industries such as cotton and linen textile, sugar, oil and tobacco are increasingly giving way to new industries such as chemical, energy, machinery and electronics.
1) Energy and basic industries - production has grown dramatically, but there is still a serious shortage of oil and gas.
On the whole, India's mineral resources are relatively rich, more complete categories, coal reserves of nearly 200 billion tons, is one of the world's important coal-producing countries. In recent years, the energy industry to develop faster, but due to the lack of modern industry, "blood" - oil, so always take off the "energy shortage" hat. A survey shows that India's petroleum resources are scarce, can be exploited less than 800 million tons, according to the current rate of exploitation, can only be exploited for another 20 years. Natural gas reserves of less than 700 billion cubic meters, can only be maintained for more than 20 years of extraction, and natural gas production in the eruption of waste is serious, the efficiency is not high.
②Pharmaceutical industry and textile industry - two bright spots in India's manufacturing sector.
India is a major producer and exporter of generic medicines: it accounts for 8% of global pharmaceutical sales, ranking fourth, and is the world's fifth-largest producer of bulk drugs. India's pharmaceutical industry has 20,000 laboratories and a pharmaceutical market of 5.3 billion euros, of which Glaxo SKB, the largest pharmaceutical company, has a 5.7% market share.
The textile industry is India's oldest and largest, accounting for about 6% of GDP in output and absorbing 35 million jobs.
3) Consumer Durables Market, Machinery and Components Market - Unsatisfactory status quo but high potential for growth.
While India has a stable domestic consumer market consisting of 300 million middle-class people, the consumption boom has not started, and most consumer durables constitute a buyer's market, with supply exceeding demand. India's machinery products are mostly low-end products, heavy-duty equipment, food processing, plastics processing textile and jewelry processing machinery has long relied on imports. But the further improvement of consumer credit can promote the prosperity of the consumer market, the government's investment in infrastructure to increase, can promote the development of machinery and components market, mainly construction machinery.
(3) the status of the tertiary sector: India's economic growth of the biggest bright spot and driving force.
The implementation of the "import substitution" policy, and the development of national industries, and the outside world is not closely linked. India by virtue of well-educated workers, information technology and English language advantage to vigorously develop the service industry. The service industry first brought India software, business processing outsourcing and other IT services boom, promote the development of India's capital and financial markets and the prosperity of the tourism industry.
① Counting on China's openness to foreign investment, a breakthrough has been made. The information services sector - the software industry has emerged as a strong force.
In the mid-1980s, the Indian government enacted a policy to support the development of computer software, and between 1991/92 and the crucial eleven years of 2001/02, the Indian software industry grew at an average annual rate of 45%, and in 2004 the figure reached 50%. India has become second only to the United States of America, "the world's software superpower", there are nearly 3,000 software and service enterprises, more than 500,000 employees, its top ten software and service enterprises in the personnel size of more than 10,000 people, the largest enterprises have been close to 40,000 people. The enterprises are all making profits of more than 20%. Bangalore, Hyderabad and Madras City formed the Indian software base of the "Golden Triangle".
②Capital financial services sector - the open financial environment to form a more developed capital markets.
India has the largest capital market in developing countries, its stock exchange is also the most varied in developing countries. There are 78 commercial banks and 196 regional agricultural banks with 6,100 branches in the country***; there are 23 stock exchanges and more than 900 listed companies, with annual new issues raising Rs. 65 to 70 billion in capital.
3) Tourism services sector - expected to become the center of the world tourism market.
India's tourism industry received 3.37 million foreign tourists in 2004, an increase of 23.5 percent over 2003, and foreign exchange earnings from tourism amounted to $48 billion, an increase of 36.1 percent over the previous year. Although India was affected by the Indian Ocean tsunami but did not affect the Indian "tourism fever", predicted that by 2025 India is expected to become the center of the world tourism market.
④ public **** services sector - infrastructure and education and health: "hardware", "software" together.
In order to make up for the lack of lagging infrastructure, the Indian government has formulated a policy of rapid development of infrastructure construction. 2010, at least 17 billion U.S. dollars was invested to improve the level of domestic roads, airports and ports, and encourage foreign investment or private consortiums to participate in infrastructure construction projects. In order to solve India's energy crisis, the government actively seeks cooperation with Saudi Arabia, Iran, Russia and other countries in energy projects, and plans to invest 1 billion U.S. dollars a year until 2015 for oil and gas projects in the Middle East, Central Asia, North Africa, Southeast Asia and Latin America.
In education, it has increased funding to universalize eight-year primary education, emphasized the cultivation and protection of high-quality scientific and technological talents, and encouraged the return of expatriate talents. In the area of health care, the development of culture and health is being promoted through the establishment of a three-tier health care network (health stations - primary health care centers - community health care centers) and the improvement of drinking water supply.
(ii) India's external economic situation
1. Foreign trade and foreign investment - trade deficit, low utilization of foreign capital
(1) foreign trade
Despite the continued appreciation of the Indian rupee against the U.S. dollar, in the first nine months of fiscal 2004-2005, India's foreign trade was the highest in the world. In the first nine months of the 2005 fiscal year, India's exports amounted to $53 billion, an increase of 23 percent over the same period last year, rather than a decrease. India's export target for the current fiscal year is 16% growth over last year. India's foreign trade, the main exporting countries and regions for the United States, Arabia, China, Hong Kong, China, Britain, Singapore, Germany, Belgium, Italy, France, the main importing countries for China, the United States, Belgium, Switzerland, Australia, Arabia, Britain, Germany, Japan and so on. The main export products are textiles, gems and jewelry, chemical products, petrochemical products, agricultural and fishery products, leather goods, electronic products and carpets, while the main import products are crude oil, gold, gemstones, iron and steel, chemical products, machinery and electronic products.
(2) Foreign Investment
In terms of attracting foreign direct investment, from 1992 to January 2004, the Indian government approved foreign investment amounting to nearly 78.3 billion U.S. dollars, with the main investing countries being the U.S., Switzerland, the United Kingdom, Japan, Germany, Holland, and Oman, etc., and the main areas of investment are petroleum, electric power, metallurgy, food processing, telecommunication, and hotel tourism. The main areas of investment are petroleum, electricity, metallurgy, food processing, telecommunications and hotel tourism. But the actual utilization rate of funds is only 40%. A few days ago, the Indian government to further improve the overseas enterprises to India's local cell phone company's investment ceiling, from 49% breakthrough to 74%, indicating that the Indian government to treat the open attitude of foreign capital has made a breakthrough. India is a country with rapid economic development, many domestic areas, especially in most infrastructure areas facing underinvestment problems, is expected to be the next step in India will have a broader field of further liberalization.
In terms of outward investment, as per the figures released by the Reserve Bank of India, India's outward investment increased by $1.5 billion in the fiscal year 2003-2004, taking the total investment to $6.6 billion.
2 China-India trade situation - China is in deficit, but the potential for economic and trade cooperation is huge.
In the past 10 years, China-India trade has developed relatively fast, and India has become China's largest trading partner in South Asia. China's main exports to India include petroleum, chemical products and electromechanical products. Imports from India are mainly iron ore, chrome ore, etc. In 1992 the Sino-Indian border trade resumed, mainly barter, the annual border trade volume of about 5 million yuan. According to China's General Administration of Customs, China's trade with India totaled 7.595 billion U.S. dollars in 2003, an increase of 53.6% over 2002, of which Chinese exports amounted to 3.344 billion U.S. dollars and imports 4.551 billion U.S. dollars.In 2004, China-India trade amounted to 13.6 billion U.S. dollars. According to the Indian side of the statistics, China's total exports to India in the 2002-2003 Indian imports, has jumped to the third place, after the United States and Belgium. During the same period, India's total exports to China also ranked No. 6, after the United States, the United Arab Emirates, the United Kingdom, Hong Kong, China and Germany. From the two sides of India's economic and trade status can be predicted that the potential for cooperation between the two countries is huge.
Two, China and India's economic comparison
The same developing countries of China and India, there are many similarities and differences in economic development. 50 years ago, the two countries are relatively backward agricultural countries, into the early 21st century, the two countries have taken great strides, have maintained a higher rate of economic growth in the world's position has also been a fundamental change.
(a) Economic development model: "world factory" and "world office"
China learned from the East Asian "four small" model, through the introduction of foreign investment, the establishment of a strong, powerful, and powerful, the world's most powerful and most important, the world's most powerful and most important, the world's most important, the world's most important, the world's most important. China followed the East Asian model of the "Four Little Ones" by importing foreign capital, building a strong industrial sector capable of providing jobs for a large agricultural population, developing labor-intensive industries, and realizing sloppy growth. As a result, China is in the process of industrialization and urbanization, and the share of industry in GDP is increasing year by year. China is becoming the "factory of the world".
India, on the other hand, emphasizes the service sector. India's service sector accounts for more than 50 percent of GDP, while industry and agriculture account for only 26 percent and 22.8 percent, respectively. India wants to be the "world office". India is the world's first developing countries through the labor start, if the 1990s globalization is the manufacturing sector to lead the "first wave" of globalization, then, the early 21st century will usher in the service sector to lead the "second wave" of globalization. China's role in the "first wave" will be very different from that of the "second wave" of globalization. While China dominated the "first wave", India has shown an overwhelming advantage over China in the "second wave". For example, in 2003, 20,000 American tax returns were completed in India, and in 2004, 200,000 tax returns were sent to India for accounting purposes.
The reason why India has taken a different path from China is mainly due to the following reasons:
1. India opened up to the outside world later, until 1991 to really open up, and at this time with the opening of the beginning of China is very different, a new round of technological revolution is beginning to show.
2. India's elite education for India to train a large number of scientific and technological talent. Although India has a high proportion of illiteracy, but it is a talented country. The Indian government attaches great importance to higher education, thus establishing its position as the world's second largest country of talent. Indian universities have produced an English-speaking scientific and technological talent pool for India that is second only to that of the United States. Relying on these globally competitive talents, India's high-tech industry has developed greatly. At present, the proportion of Indians among the scientific and technological talents of the United States and the United Kingdom is quite high.
3. India's poor infrastructure plays a role in hindering the development of industry. India's roads, railroads, ports, aviation, communications development lags behind, problems; India's power supply is insufficient, the uneven distribution of domestic energy, India's stored oil is mainly distributed in the west and north, most of the coal is distributed in the southeast, the pressure of transportation.
4. India's arable land area is the second largest in the world, and the irrigated area is the highest in the world. The transfer of rural labor is not as urgent as in China.
(ii) foreign economic strategy:
In foreign trade policy, India from independence to the end of the 1970s to implement the "import substitution" policy to protect and develop national industries, and the outside world is not close; to the 1980s began to implement the "import substitution" policy to protect and develop national industries, and the outside world is not close; to the beginning of the implementation of the 1980s. "Import substitution" and "export promotion" trade policy; from the 1990s, especially after joining the WTO, India began to implement "export-oriented" foreign trade policy. Foreign trade policy. Due to India's long-term implementation of the protection of the domestic market of inward import substitution economic development strategy, the domestic market to implement a high degree of protection (due to the frequent implementation of anti-dumping investigations, in 2001 India was recognized by the World Bank as the most serious trade barriers to the country), resulting in India's slow development of import and export trade, a long-term state of trade deficits, foreign trade to the GDP of the contribution of the rate is very low, and ultimately affect the rate of economic development in India. The rate of economic development in India was ultimately affected. China, on the other hand, has been committed to export-oriented economic development since the early 1980s, and has practiced an externally oriented economy along its southeastern coast.
In 2004, India's two-way trade totaled only $150 billion, an annual share of less than 1 percent of total global trade, whereas by 2003, China's share of world exports was 5.8 percent and of world imports was 5.3 percent. two-way trade grew by 36 percent in 2004, and China overtook Japan to become the third-largest trading nation, behind the United States and Germany. In the 1990s, China's trade and GDP grew by more than 70%. India's trade-to-GDP ratio grew by only 23 percent.
In terms of attracting foreign investment, China has much more favorable policies in terms of equity, investment areas and taxation compared to India. Our country is relatively more attractive to foreign investment than India. India due to the complexity of ethnic and sectarian conflicts, political unrest, strong parliamentary opposition parties, non-governmental organizations have a large impact, which constrains the government's policy on the use of foreign investment. At present, India's foreign investment policy has undergone some changes. in the 1990s, India had strictly limited the entry of foreign capital, but now, the Indian government has increased its efforts to attract foreign investment. Imitating China, India has taken a series of preferential measures to set up about 20 special economic zones across the country to attract investment.
In recent years, there are a number of multinational enterprises factories shifted to India, India has become the research and development center of a number of large companies. India's advantages have been highlighted.
1. Talent advantage. Not only is a large number of English-speaking scientific and technological talent, but also includes a large number of management personnel.
2. Legal system advantage. India's state apparatus and legal system in developing countries appear relatively sound and stable, the legal system is relatively perfect.
In connection with the world's major powers, international economic organizations and regional economic organizations, in 1997, India's exports to the APEC 21 countries accounted for 48.0% of its total exports, followed by the European Union 15 (24.7%), the North American Free Trade Area (NAFTA) (20.3%), the Indian Ocean Rim Organization for Regional Cooperation (IORCO) 18 countries (18.9%), the Gulf Cooperation Council ( 7.1%), ASEAN 10 (6.8%), Bangladesh, Myanmar, Sri Lanka, India, Thailand Cooperation Organization, or BIMSTEC-4 (4.5%),South Asia Regional Cooperation Organization (4.1%), of which trade with the GCC is going to be energy.
Three, Nirvana - "Indian model"?
(A) "India model" features
In the "Toward 2050" report, Goldman Sachs predicted that India in the next 50 years, is expected to become the world's fastest-growing economy among major economies. Many scholars are optimistic about India's future growth, and they believe that India's economic system and market structure are better able to ensure long-term growth potential.
Indian politicians such as Mahatma Gandhi and the founding father of the nation, Nehru, have been exploring a path consistent with India's modernization. It has been a well-trodden path, but it is increasingly showing its end. Some scholars believe that India has chosen a healthier and more sustainable path of development than China. If the "Chinese model" characterized by "hard", that is, China's economic growth is driven by the expansion of physical infrastructure and manufacturing, belonging to the sweat (inspiration)-driven type; then, the so-called The so-called "Indian model" is characterized by "soft", shaped by its institutional infrastructure and entrepreneurial spirit (aspiration). China's economic strength is more materialized in the buildings (including plants) above, is hard, visible, while India's economic strength is determined by its potential, is soft. The "soft" here includes both technology and, in a broader sense, institutions, including culture.
In India's proud service sector, the fastest growing is the software industry. India is one of the world's top five suppliers of computer software, is the second largest exporter of computer software after the U.S., software exports accounted for 20% of the global market share, U.S. customers to buy 60% of the software products are made in India. The World Economic Forum's Global Information Technology Report 2004-2005, released on March 9, 2004, shows that India rose to 39th place from 45th place last year. It is at the forefront of developing countries.
(ii) Reasons for the formation of the "Indian model"
If "soft" is only a symbol of India's economic development, its deeper power comes from endogenous institutional factors.
Institutional evolving perspectives that India has. From Gandhi onwards, India has practiced a different kind of socialism in its economy from the former Soviet Union, leaning more towards a parliamentary socialism like the one in Europe. Speaking at the World Economic Forum in Davos, Switzerland, Prime Minister Rao said that India's economic development would have to follow a "middle path" and that the country would have to "pursue its own economic model in a balanced manner".
India's financial system continues the British left behind the financial system, its banking system has a history of 130 years, most of India's banks are private banks, running well, the rate of bad debt is very low, the whole banking system is relatively sound, with a better international reputation. The stock market also has a history of more than a century. The Mumbai stock exchange is world famous. 23 exchanges listed more than 6000 enterprises.
India's better-ordered markets and market-based allocation of resources have supported the rapid development of the private economy and created a new entrepreneurial spirit. International investors believe that India has a better corporate disclosure system, stronger property rights protection measures and a more investor-friendly competitive system than China. For example, Mr. Tarun Kaina, the founder and CEO of Tarun Khanna (Massachusetts Institute of Technology) and Yasheng Huang (Harvard Business School) published an article in the July/August 2003 issue of Foreign Policy - "Can India Surpass China? in the July/August 2003 issue of Foreign Policy. In the article, they elaborated on the idea that the future development of a country's economy ultimately depends on the mobilization of its own resources. Because of India's faster private sector development and its focus on organic growth within itself, this has led to a better utilization of resources in India.
India has the unique advantages of a developing country - good English language education, management in line with internationalization, etc. English is the universal language, influenced by the colonial culture, India's elite education in the internationalized talent is more likely to accept the international advanced management experience. Have a large number of internationalized talents, a large number of multinational corporations that can compete with Europe and the United States, India's pace of integration into the global economic system is more solid.
Scholars have argued that after the reforms of the 1990s, India's economic and political model has begun to incorporate East Asian characteristics. As Paul Krugman has pointed out, China and other countries like India have become more integrated into the global economic system. Krugman points out, the economic miracle of East Asian countries such as China has been driven by capital. Recently, India has also shown strong momentum in this regard. The Financial Express published an article that India should not only vigorously develop the "software model", but also in attracting foreign capital to outperform China. A 2004 annual report released by the British management consulting firm A.T. Kearney shows that India has become the world's third most attractive investment destination after China and the United States.
Fourth, India's economic outlook: opportunities and challenges
For 2005-25 India's average annual GDP growth rate of 7.0%, 8.0%, 9.0%, 10.0% (see attached table), the degree of realization of the domestic economic conditions (infrastructure, energy supply, etc.) and the international economic environment (international oil prices, etc.). economic environment (international oil prices, etc.). Over the next 20 years, India will increase its investment in this area (see attached table). India will occupy a significant position in the world market for technology imports and will account for 15.% of global software exports by 2025. In addition to this, industries with growth potential include 1) tourism, 2) information services, 3) consulting and management, 4) education and training for stress relief such as yoga, 5) export of middle-skilled labor, and 6) export of highly skilled personnel. In terms of relations with world powers and regional organizations, the main focus will be on the "Look East" strategy, which will focus on strengthening economic and trade relations with regional organizations and powers such as ASEAN.
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