Dr. Susmit Kumar, Ph.D.
By watching the grand show of China’s OBOR (One Belt One Road) Summit, attended by 65 countries, including US and Japan, all Indians are feeling dejected. This is one more step taken by China in its goal to replace the US as the super-power. Both China and India started the economic liberalization nearly at the same time in the early 1990s, but China is now the global economic leader whereas India is nowhere in the global economy. Since 1990s, India have run trade deficits year after year whereas China had trade surpluses, enabling it to amass four trillion dollar FOREX (FOReign EXchange), making it the undisputed country to replace the US as the world’s number one economic superpower. Hence, Indians have to blame the economists and the political leaders who depended on the former, for letdown.
In recent years, India has been boasting about its economic growth rate, projecting it to be the highest in the world, surpassing that of China. All over the world economists are predicting that India’s growth rate would now surpass that of China, resulting in India’s GDP to be the second largest in the world by 2040, behind China and surpassing the US. Indians use this data as a ticket to super-power status. But there is a fundamental difference between the growth rates of India and China. Behind India’s phenomenal growth rate, the country has trade deficit year on year for more than two decades whereas China has trade surplus in the same period. History has shown us that the Indian economy has the potential to collapse if subjected to an economic crisis whereas the Chinese economy can withstand it. In the recent three years, our trade deficit with China has been increasing as usual year after year like the US trade deficit with China. As explained in my two articles Is "Make In India" Theme Helping Indian Economy? - Part I and Is "Make In India" Theme Helping Indian Economy? – Part II, the Niti Aayog and also the “Make-in-India” policy of the Modi government have no significant positive bearing on India’s trade deficit.
