1. Overview of India’s economic status

(1) India’s domestic economic situation

As a country with the world’s fourth largest military, the eighth largest manufacturing industry and The world's second most populous country after the United States in terms of high-tech talent resources is creating the myth of "India's rise". In the "Tenth Five-Year Plan", the Indian government set the economic growth rate from 2002 to 2007 at 8%. However, due to India's heavy population burden, unbalanced industrial structure, huge fiscal deficit, and wide gap between rich and poor, The realization of this goal is not easy due to backward infrastructure, high non-performing bank assets, and persistent domestic caste system and religious conflicts.

1. Overview of the current status of India's domestic economic development

From the independence of the Indian economy to the 1980s, the average annual GDP growth rate was only 3.5%, which increased to 5.6% in the 1980s and 7% in the mid-1990s. %, and the growth rate in the fourth quarter of 2003 exceeded that of China, reaching a record high of 10.4%. The economic growth rate in the second quarter of fiscal year 2004-2005 was 6.6%, of which the construction industry growth rate was 5.2%, the industrial growth rate was 9.3%, and the tertiary industry growth rate was 8.25%. Merchandise trade increased by 53.5% in the second quarter, more than double the 24.6% increase in the first quarter, and foreign direct investment increased by 26.8%. The Indian economy has entered a "golden era."

(1) Current status of the primary industry: The "Green Revolution" has increased agricultural production and income, but there is still a long way to go to develop agriculture through science and technology.

Today's India has completely changed the image of "carrying a begging basket". Grain production increased from 15 million tons at the beginning of independence to 220 million tons in 2003. In 2004-2005 (July to The grain production target for June of the following year is 225.1 million tons but due to lower rainfall, the output is expected to be reduced to 206 million tons. India now ranks among the top in the world in terms of production of many agricultural products such as rice, wheat, pulses, cotton, sugarcane, tea, tobacco and jute. This is mainly due to the "Green Revolution" carried out in India from 1964 to 1970, and the "White Revolution" and "Blue Revolution" carried out in India after the 1990s, which promoted the development of animal husbandry and fisheries. Now India is moving towards the goal of doubling grain production in 2010, and the grain market is expected to exceed 2.5 trillion rubles by then. But objectively speaking, India's agricultural productivity is still very low. The grain output per unit area of ??1.7 tons per hectare is still far from the world level of 2.6 tons and the level of developed countries of more than 5 tons. Therefore, in the 2005 budget report, the Indian government particularly emphasized the need to improve the investment environment in the agricultural sector, including allowing domestic agricultural exporters to import seeds and agricultural supplies duty-free. The key to India's agricultural development is to reclaim wasteland, select and breed improved seeds, transform agricultural infrastructure, build a water conservancy facility network to increase irrigation area, ensure power supply, improve grain processing and storage capabilities, improve grain market circulation links, and make agriculture develop on a sustainable path. .

(2) Current status of the secondary industry: The strength of emerging industries is gradually increasing, but coordinated development cannot be ignored.

India has now established a relatively complete industrial system, among which fields such as pharmaceuticals and automobiles are highly competitive in the international market. India's energy industry (including coal, oil and electricity) is also developing rapidly. Coal is India's primary energy source, accounting for more than 40% of the country's commodity energy consumption. However, power supply is still tight, and India is currently seeking to develop power generation using sugarcane bagasse as raw material to further supplement the shortage of traditional coal power generation. Light industry occupies an important position in Indian industry, and its output value accounts for more than 20% of the total industrial output value. It is mainly the textile industry and food industry, among which sugar, tea and textile output occupy an important position in the world. With the development of the entire industry, the dominant positions of traditional industries such as cotton and linen textiles, sugar refining, oil extraction, and tobacco production are constantly giving way to emerging industries such as chemistry, energy, machinery, and electronics.

① Energy and basic industries-output has increased significantly, but there is still a serious shortage of oil and natural gas.

On the whole, India is rich in mineral resources, with a relatively complete range of mineral resources, and coal reserves of nearly 200 billion tons. It is one of the important coal-producing countries in the world. The energy industry has developed rapidly in recent years, but due to the lack of oil, the "blood" of modern industry, it has always been labeled as "energy shortage". A survey shows that India is short of oil resources, with less than 800 million tons of oil that can be mined. At the current rate of production, it can only be mined for another 20 years. Natural gas reserves are less than 700 billion cubic meters, which can only sustain the production volume for more than 20 years. Moreover, the eruption waste in natural gas production is serious and the efficiency is not high.

②Pharmaceutical industry and textile industry-two highlights of India's manufacturing industry.

India is a major producer and exporter of generic drugs: India's drugs account for 8% of global drug sales, ranking fourth, and it is the world's fifth largest producer of bulk drugs. India's pharmaceutical industry has 20,000 laboratories, and the pharmaceutical market size is 5.3 billion euros, of which Glaxo SKB, the largest pharmaceutical company, holds 5.7% of the market share.

The textile industry is India's oldest and largest industry. Its output accounts for about 6% of GDP and employs 35 million people.

③ Durable consumer goods market, machinery and parts market - the current situation is not optimistic but the development potential is great.

Although India has a stable consumer market composed of 300 million middle class people, the consumption boom has not started. Most durable consumer goods constitute a buyer's market, with supply exceeding demand. India's machinery products are mostly low-end products, and heavy-duty equipment, food processing, plastic processing, textile and jewelry processing machinery have long relied on imports. However, the further improvement of consumer credit can promote the prosperity of the consumer market, and the government's increased investment in infrastructure can promote the development of the machinery and parts market, mainly construction machinery.

(3) Current situation of the tertiary industry: the biggest highlight and driving force of India’s economic growth.

It pursues an "import substitution" policy and develops national industries, and is not closely connected with the outside world. India has vigorously developed its service industry with its well-educated workers, information technology and English language advantages. The service industry took the lead in bringing about the prosperity of India's IT service industries such as software and business processing outsourcing, and promoted the development of India's capital and financial markets and the prosperity of the tourism industry.

① According to statistics, China’s openness to foreign investment has made a breakthrough. Information service sector - the software industry has emerged as a new force and is strong.

In the mid-1980s, the Indian government promulgated policies to support the development of computer software. In the critical eleven years from 1991/92 to 2001/02, the average annual growth rate of the Indian software industry reached 45%. %, which reached 50% in 2004. India has become the "world's software superpower" after the United States. There are currently nearly 3,000 software and service companies with more than 500,000 employees. The top ten software and service companies have more than 10,000 employees, and the largest The number of enterprises has approached 40,000. Corporate profits are above 20%. The cities of Bangalore, Hyderabad and Madras form the "golden triangle" of India's software base.

②Capital financial services sector-the open financial environment has formed a relatively developed capital market.

India has the largest capital market among developing countries, and its stock trading categories are also the largest among developing countries. There are 78 commercial banks and 196 regional agricultural banks in the country, with 6,100 branches and branches; 23 stock exchanges and more than 900 listed companies. The annual issuance of new stocks can raise 65 billion to 70 billion rupees.

③Tourism service sector-is expected to become the center of the world tourism market.

The Indian tourism industry received 3.37 million foreign tourists in 2004, an increase of 23.5% over 2003, and the foreign exchange revenue from tourism was US$48 billion, an increase of 36.1% over the previous year. Although India was affected by the Indian Ocean tsunami, it did not affect India's "tourism craze". It is predicted that India is expected to become the center of the world's tourism market by 2025.

④Public service department - infrastructure, culture, education and health: "hardware" and "software" should be focused on together.

In order to make up for the lagging infrastructure, the Indian government has formulated a policy to rapidly develop infrastructure construction. In 2010, at least US$17 billion was invested in improving domestic roads, airports and ports, and encouraging foreign investment or private consortiums to participate in infrastructure construction projects. In order to solve India's energy crisis, the government is actively seeking cooperation on energy projects with Saudi Arabia, Iran, Russia and other countries, and plans to invest US$1 billion per year by 2015 in oil and gas projects in the Middle East, Central Asia, North Africa, Southeast Asia and Latin America.

In terms of education, we will increase investment in education, popularize eight-year primary education, attach importance to cultivating and protecting high-quality scientific and technological talents, and encourage the return of out-migrated talents. In terms of medical and health care, measures such as establishing a three-level medical insurance network (health stations-primary health care centers-community health centers) are used to improve drinking water supply and promote the development of cultural and health undertakings.

(2) India’s external economic situation

1. Foreign trade and foreign investment situation - trade deficit, low utilization rate of foreign capital

(1) Foreign trade

Despite the continued appreciation of the Indian rupee against the US dollar, in the first nine months of the 2004-2005 fiscal year India's exports last month were US$53 billion, an increase of 23% compared with the same period last year. India's export target for this fiscal year is to grow by 16% over last year. In India's foreign trade, the main exporting countries and regions are the United States, Arabia, China, Hong Kong, the United Kingdom, Singapore, Germany, Belgium, Italy, and France; the main importing countries are China, the United States, Belgium, Switzerland, Australia, Arabia, the United Kingdom, Germany, Japan, etc. The main export products include textiles, gems and jewelry, chemical products, petrochemical products, agricultural and fishery products, leather products, electronic products and carpets, etc. The main imported products include crude oil, gold, gemstones, steel, chemical products, machinery and electronic products.

(2) Foreign investment

In terms of attracting foreign direct investment, from 1992 to January 2004, the amount of foreign investment approved by the Indian government was nearly US$78.3 billion. The main investment The countries include the United States, Switzerland, the United Kingdom, Japan, Germany, the Netherlands and Oman. The main investment areas include petroleum, electric power, metallurgy, food processing, telecommunications and hotel tourism. But the actual utilization rate of funds is only 40%.

Recently, the Indian government further increased the investment limit for overseas companies in local mobile phone companies in India, from 49% to 74%, indicating that the Indian government's open attitude towards foreign investment has achieved a breakthrough. India is a country with rapid economic development. Many domestic fields, especially in most infrastructure fields, are facing the problem of insufficient investment. It is expected that India will further liberalize wider areas in the next step.

In terms of foreign investment, according to figures released by the Reserve Bank of India, India's foreign investment increased by US$1.5 billion in the fiscal year 2003-2004, with the total investment reaching US$6.6 billion.

2 Sino-Indian trade situation - China has a deficit, but there is huge potential for economic and trade cooperation.

In the past 10 years, Sino-Indian trade has developed rapidly, and India has become China's largest trading partner in South Asia. China's main export commodities to India include petroleum, chemical products and mechanical and electrical products. The main commodities imported from India include iron ore, chrome ore, etc. In 1992, Sino-Indian border trade resumed and was mainly barter. The annual border trade volume is about 5 million yuan. According to statistics from the General Administration of Customs of China, the total trade volume between China and India in 2003 was US$7.595 billion, an increase of 53.6% over 2002, of which China's export volume was US$3.344 billion and import volume was US$4.551 billion. In 2004, the trade volume between China and India reached US$13.6 billion. According to Indian statistics, China's total merchandise exports to India ranked third in India's import volume in 2002-2003, second only to the United States and Belgium. During the same period, India's total merchandise exports to China also ranked sixth, only behind the United States, the United Arab Emirates, the United Kingdom, Hong Kong, China, and Germany. From the improvement of the economic and trade status of China and India, it can be predicted that the potential for cooperation between the two countries is huge.

2. Comparison of the economies of China and India

China and India, both large developing countries, have many similarities and differences in their economic development. Fifty years ago, both countries were relatively backward agricultural countries. At the beginning of the 21st century, both countries have made great progress, maintained high economic growth rates, and their status in the world has also undergone fundamental changes.

(1) Economic development model: “World Factory” and “World Office”

China learned from the East Asian “Four Small” model and established a strong, The industrial sector that can provide jobs for a large agricultural population develops labor-intensive industries and achieves extensive growth. Therefore, China is in the process of industrialization and urbanization, and the proportion of industry in GDP is increasing year by year. China is becoming the "factory of the world."

On the contrary, India attaches great importance to the service industry. India's service industry accounts for more than 50% of GDP, while industry and agriculture account for only 26% and 22.8% respectively. India wants to be the "World Office". India is the first developing country in the world that started through labor. If the globalization in the 1990s was the "first wave" of globalization led by manufacturing, then the early 21st century will usher in the service industry. the “second wave” of globalization. China had the advantage in the "first wave", while India showed an overwhelming advantage over China in the "second wave". For example, in 2003, the tax returns and accounting statistics of 20,000 Americans were completed in India. In 2004, 200,000 tax forms were sent to India for accounting statistics.

The main reasons why India has taken a different path from China are as follows:

1. India opened up late to the outside world and did not really open up until 1991. At this time It is very different from China when it first opened up. A new round of scientific and technological revolution is beginning to take shape.

2. India’s elite education has cultivated a large number of scientific and technological talents for India. Although India has a high proportion of illiterates, it is a country rich in talent. The Indian government attaches great importance to higher education, thus establishing its status as the second largest country in terms of talent in the world. India's universities have produced the largest English-speaking tech talent pool in India, second only to the United States. Relying on these globally competitive talents, India's high-tech industry has developed greatly. At present, the proportion of Indians among scientific and technological talents in the United States, Britain and other countries is quite high.

3. India’s poor infrastructure has hindered the development of industry. The development of India's roads, railways, ports, aviation, and communications lags behind and is full of problems; India's power supply is insufficient and domestic energy is unevenly distributed. India's oil reserves are mainly distributed in the west and north, and coal is mostly distributed in the southeast, posing great transportation pressure.

4． India has the second largest arable land area in the world and the largest irrigated area in the world. The transfer of rural labor is not as urgent as in China.

(2) Foreign economic strategy:

In terms of foreign trade policy, India implemented an "import substitution" policy from independence to the late 1970s to protect and develop the nation. industry, and was not closely connected with the outside world; in the 1980s, it began to implement a trade policy that placed equal emphasis on "import substitution" and "export promotion"; starting in the 1990s, especially after joining the WTO, India began to implement an "export-oriented" foreign trade policy.

Since India has long implemented an inward-oriented import substitution economic development strategy to protect the domestic market and implemented a high degree of protection for the domestic market (due to frequent anti-dumping investigations, India was identified by the World Bank as the country with the most serious trade barriers in 2001), resulting in India's import and export trade. Development is slow, with long-term trade deficit, and the contribution of foreign trade to GDP is also very low, which ultimately affects the speed of India's economic development. Since the early 1980s, China has been committed to export-oriented economic development and implemented an export-oriented economy along its southeastern coast.

In 2004, India's total two-way trade was only US$150 billion, accounting for less than 1% of the total global trade. By 2003, China's share of world exports was 5.8%. The share in world imports is 5.3%. In 2004, two-way trade increased by 36%, and China surpassed Japan to become the third largest trading country, second only to the United States and Germany. In the 1990s, China's trade volume and GDP increased by more than 70%. The ratio of India's trade volume to GDP only increased by 23%.

In terms of attracting foreign investment, compared with India, China has much more favorable policies in terms of equity, investment fields, taxation and other aspects. Our country is relatively more attractive to foreign investment than India. India's complex ethnic and sectarian conflicts, political instability, strong opposition parties in parliament, and the great influence of non-governmental organizations have restricted the government's policy on utilizing foreign investment. At present, India's foreign investment policy has undergone some changes. In the 1990s, India strictly restricted the entry of foreign investment, but now, the Indian government has increased its efforts to attract foreign investment. India has followed China's example and adopted a series of preferential measures to establish about 20 special economic zones across the country to attract investment.

In recent years, some multinational companies have moved their factories to India, and India has become the R&D center of many large companies. India's advantages have been highlighted.

1. Talent advantage. Not only are there a large number of English-speaking scientific and technological talents, but also a large number of management talents.

2. Advantages of the legal system. India's state machinery and legal system appear to be relatively sound and stable among developing countries, and its legal system is relatively complete.

In terms of connections with the world's major powers, international economic organizations and regional economic organizations, in 1997, India's exports to the APEC21 countries accounted for 48.0% of its total exports, followed by the 15 EU countries (24.7% ), North American Free Trade Area (20.3%), 18 Indian Ocean Rim Cooperation Organization countries (18.9%), Gulf Cooperation Council (7.1%), 10 ASEAN countries (6.8%), Bangladesh, Myanmar, Sri Lanka, India, and Thailand Organizations, namely BIMSTEC-4 (4.5%), South Asia Regional Cooperation Organization (4.1%), among which trade with the Gulf Cooperation Council is energy.

3. Rebirth from Nirvana - "Indian Model"?

(1) Characteristics of the "India Model"

In the "Towards 2050" report, Goldman Sachs predicts that India is expected to become one of the world's major economies in the next 50 years. The country with the fastest economic development. Many scholars are optimistic about India's future development. They believe that India's economic system and market structure can better guarantee long-term development potential.

Indian politicians such as Mahatma Gandhi and the founding father Nehru have been exploring a path that is consistent with India's modernization. This road has been very tortuous, but it is increasingly showing its end. Some scholars believe that India has chosen a healthier and more sustainable development path than China. If the "China model" is characterized by "hardness", that is, China's economic growth is driven by the expansion of physical infrastructure and manufacturing, and is driven by inspiration; then the so-called "India model" is based on It is characterized by "softness" and is shaped by its institutional infrastructure and entrepreneurial spirit (aspiration). China's economic strength is more materialized in buildings (including factories), which is hard and visible, while India's economic strength is determined by its potential, which is soft. “Soft” here includes not only technology, but also institutions in a broad sense, including culture.

Among the service industries that India is proud of, the software industry is the fastest growing. India is one of the top five computer software suppliers in the world and the second largest exporter of computer software after the United States. Software exports account for 20% of the global market share. 60% of the software products purchased by American customers are made in India. The 2004-2005 Global Information Technology Report released by the World Economic Forum on March 9, 2004 showed that India rose to 39th place from 45th last year. Leading the way in developing countries.

(2) Reasons for the formation of the "India Model"

If "soft" is just a symbol of India's economic development, then its deep-seated power comes from the endogenous system sexual factors.

India’s comparative advantages in institutional evolution (institutional evolving perspectives). Starting from Gandhi, India's economy has implemented a socialism that is different from that of the former Soviet Union, and is more inclined to parliamentary socialism like Europe.

Prime Minister Rao said at the World Economic Forum in Davos, Switzerland, that India's economic development must take a "middle path" and India must "implement its own economic model in a balanced way."

India’s financial system continues the financial system left by the British. Its banking system has a history of 130 years. Most Indian banks are private banks, which operate well and have a very low bad debt rate. The entire banking system It is relatively sound and has better international reputation. The stock market also has a history of more than a hundred years. Bombay's stock exchange is world-famous. There are more than 6,000 companies listed on 23 exchanges.

India’s market order is relatively good and resource allocation is market-oriented, which supports the rapid development of the private economy and creates a new entrepreneurial spirit. International investors believe that compared with China, India has a more complete corporate information disclosure system, stronger property rights protection measures and a more investor-friendly competition system. For example, Tarun Khanna (MIT) and Yasheng Huang (Harvard Business School) published an article in the July and August 2003 issue of "Foreign Policy" - "Can India surpass China?" 》. In the article, they elaborated on the view that the future development of a country's economy ultimately depends on the mobilization of its own resources. Since India's private enterprises have developed rapidly and focused on their own internal organic growth, India has made fuller use of its resources.

India has unique advantages as a developing country in China - good English education, international management, etc. English is the universal language. Influenced by colonial culture, international talents in India's elite education are more likely to accept advanced international management experience. With a large number of international talents and a large number of multinational companies that can compete with Europe and the United States, India's integration into the global economic system is more solid.

Some scholars believe that after reforms since the 1990s, India's economic and political model has begun to incorporate East Asian characteristics. As Paul Krugman pointed out, the economic miracle of China and other East Asian countries is driven by capital. Recently, India has also shown strong momentum in this regard. "Financial Express" published an article stating that India must not only vigorously develop the "software model" but also outperform China in attracting foreign investment. A 2004 annual report released by the British management consulting firm Kearney showed that India has become the third most attractive investment destination in the world after China and the United States.

IV. Indian Economic Outlook: Opportunities and Challenges Coexist

There are different forecasts for India’s average annual GDP growth rate from 2005 to 2025, which are 7.0%, 8.0%, and 9.0% respectively. , 10.0% (see attached table), and its degree of realization is affected by domestic economic conditions (infrastructure construction, energy supply, etc.) and the international economic environment (international oil prices, etc.). In the next 20 years, India will increase its investment in this area (see attached table). India will occupy an important position in the world's technology import market. By 2025, its software exports will account for 15% of global software exports. In addition, industries with development potential also include: 1) tourism; 2) information services industry; 3) consulting management industry; 4) yoga and other stress-relieving education and training; 5) medium-skilled labor export; 6) Export of high-tech personnel, etc. In terms of relations with world powers and regional organizations, the main focus is the "Look East" strategy, which will focus on strengthening economic and trade relations with regional organizations and major countries such as ASEAN.

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