Economic Survey 2023-24:
Why India’s march to ‘Viksit Bharat’ will be more difficult than China’s rise
July 22, 2024
India, which is currently the world’s fifth largest economy in terms of nominal GDP, is looking to become the third largest in the coming years, and one area that India is looking to benefit is the ‘China Plus One’ strategy. But will India be able to benefit from the China Plus One strategy? And how easy will India’s journey be to ‘Viksit Bharat’ by 2047?
According to the Economic Survey 2023-24 tabled in Parliament by Finance Minister Nirmala Sitharaman, India’s march towards being a developed country will be different from China’s - and it won’t be an easy road!
“Between the last Economic survey published in January 2023 and this one, big changes are afoot in the geopolitical environment.
The global backdrop for India’s march towards Viksit Bharat in 2047 could not be more different from what it was during the rise of China between 1980 and 2015,” the Economic Survey notes.
“Then, globalisation was at the cusp of its long expansion. Geopolitics was largely calm with the end of the Cold War, and Western powers welcomed and even encouraged the rise of China and its integration into the world economy. Concerns over climate change and global warming were not so pervasive or grave then as they are now,” the Survey notes.
Also, the advent of Artificial Intelligence casts a huge pall of uncertainty as to its impact on workers across all skill levels – low, semi and high. “These will create barriers and hurdles to sustained high growth rates for India in the coming years and decades. Overcoming these requires a grand alliance of union and state governments and the private sector,” the Economic Survey says.
India has the potential to gain from the 'China plus one' approach due to its vast domestic consumer base, which makes it an appealing location for businesses to establish their operations.
How Can India Benefit From China plus one strategy?
According to the Economic Survey, India has two options to capitalize on the China plus one strategy: it can either integrate into China's supply chain or encourage foreign direct investment (FDI) from China. Between these two options, prioritizing FDI from China appears to be a more promising avenue for increasing India's exports to the United States, following the example set by East Asian economies in the past, the Survey says.
Furthermore, selecting FDI as a means to benefit from China plus one strategy seems more beneficial than depending on trade. This is because China is India's primary import partner, and the trade deficit with China has been increasing.
As the United States and Europe shift their immediate sourcing away from China, it is more efficient to have Chinese companies invest in India and then export the products to these markets rather than importing from China, adding minimal value, and then re-exporting them, it adds.
[The Times of India]
