India: The Future Economic And Knowledge Super Power?

Abstract

India and China are the only countries in the world having a population of over one billion each. Until the 1980s, their economies were among the poorest in the world. India has been the largest democracy since 1947 but heart-rending sights of extreme poverty can be seen even in the flourishing business capitals. There are no subways, very few highways which results in nightmarish tangle of traffic all the time. China has been under the communist rule since the revolution led by Mao Tse Tung in 1966 and still continues to be under the centralized communist rule. Both the countries operated under centralized planning and kept their economies closed to global markets. However, in the past two decades, the world is witnessing a strange miracle taking place in both the countries. In the early 1980s, first China and later, India, started opening their economies to foreign direct investment and began participating more and more in global trade. The world had never witnessed this rare phenomenon of two relatively poor countries that together consist of a third of the world’s population, simultaneously taking off on a steep ascent in their economies. During the past twenty years, China has been growing at a heady rate of over 9% a year and India has growing at over 6% per year. This miraculous and sustained growth of these two countries is being watched by the rest of the world with mixture of surprise and apprehension. At this rate, it is expected that, within the next two or three decades, India and China together would account for over half of the entire world’s output. This paper presents the several factors of the phenomenal development of the Indian economy and analyses the impact of continued rise in their prosperity on the global economy.