China’s performance in dealing with inequality is far superior to that of India. Compare India with China and examine what makes it possible for China to do better than India. (200 words)
Refer – The Hindu
Enrich the answer from other sources, if the question demands.
IAS Parliament 6 years
KEY POINTS
· World Inequality Report 2018, released recently highlights the comparison of economic progress made in India and China.
· It reports that the inequality in China today is considerably lower than in India.
· The top 1% of income earners in India receives 22% of the total income as opposed to 14% of the total income of Chinese population.
India Vs China
· India and China both suffered a declining per capita income and a rising population during the first half of the 20th century, but that India was slightly better off than China.
· By 1998 this is reversed. Both countries are better off, but China is much better off than India.
· Thus, while India roughly trebled its income, China increased it sevenfold.
· Since 1980, while the Chinese economy has grown 800% and India’s a far lower 200%.
· Per capita income in China was five times that of India in 2016.
· While more populous than India, China is still laudable for its efforts to reduce inequality.
How China reduces its inequality?
· China’s leadership combined the drive for growth with the spreading of human capital.
· Human capital may be understood as a person’s endowment derived from education and robust health.
· When a population is more or less equally endowed, as it was in China, the returns to labour would also be relatively equal.
· We cannot expect the same in India where the distribution of human capital is unequal.
· When comparing education, the share of the Indian population with secondary schooling is less than 15%. China had by the early 1970s achieved the level of schooling India did only by the early 21st century.
· The spread of health and education in China enabled the Chinese economy to grow faster than India by exporting manufactures to the rest of the world.
· These goods may not have been good in quality but they were globally competitive, which made their domestic production viable.
· The resulting growth lifted vast multitudes out of poverty. As the human capital endowment was relatively equal, most people could share in this growth, which accounts for the relative equality of outcomes in China when compared to India.
· An ingredient of this is also the greater participation of women in the workforce of China, an outcome that eludes India.
Taniya 6 years
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