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| T N Ninan: Second again? | | Ten years ago, some hopeful commentators forecast that the decade to come was going to be India's but the top prize went to China |
| T N Ninan / New Delhi Jan 01, 2011, 00:44 IST |
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Ten years ago, at the dawn of the new millennium, some hopeful commentators forecast that the decade to come was going to be India’s. It has been—almost, because the top prize goes to China, which in 2010 emerged as the world’s second-largest economy (it was seventh largest in 2000). India did well, clocking 7.5 per cent annual growth (up from 6 per cent in the 1980s and 1990s), but has been overshadowed by China. In reality, therefore, it has been an also-ran. Its bigger neighbour has simply moved into another league; it now single-handedly moves commodity and energy markets around the world, not to mention currency markets, and has made a determined foray into Africa. It intends to move into Central Asia, and has become confident enough to take on several East Asian countries simultaneously—Vietnam, Indonesia, Japan and, of course, Taiwan. It is also thrusting into India’s neighbourhood. Further, with the construction of an impressive railway line into Tibet, the positioning of more powerful missiles on that plateau, and (most recently) improved road and tunnel connections right up to the disputed Indian border, it poses a new level of military threat. Among other things, China has a defence budget that is five-and-a-half times India’s. If anyone needed any reminding, it doesn’t pay to come in second-best.
What of the coming decade? The risk is that India will end up second-best once again, though it is likely to put in a stronger performance than in the 2001-2010 period, because annual growth might be faster (most likely 8.5 - 9 per cent). The country’s global clout will grow too, when it emerges as the fifth-largest economy (it is 10th today). In many respects, India in 2020 will be akin to what China is today—which is not a bad position to be in. But the gap with China, whose economy is now three-and-a-half times India’s, is unlikely to have shrunk. It will be achievement enough if the gap does not grow, because (barring accidents) China by then would have grown to about the size of the US economy today. Through the coming decade, therefore, the primary concern of the world’s powers (including India) will be simply coping with the consequences of China’s rise.
Three issues need consideration. First, how much strategic space will India have wrested for itself through better performance in the second decade of the century, and will that have served to contain the tensions with China—tensions that have grown this past year? Second, can Planet Earth deal with the birth of a second United States; the global economy may grow, as a result, from a little over $60 trillion today to perhaps $80 trillion. Given that the world’s carbon footprint already exceeds Planet Earth’s carrying capacity, and given the surge in demand that one should expect from commodity-intensive growth in India and China, environmental breakdown could well provoke a crisis—and, therefore, a discontinuity (in which case, all bets are off). The third issue, of course, is whether the United States, laden with public debt, will have the will and the wherewithal to maintain military superiority over China, whether the other Asian powers will come closer together to face the Chinese dragon (Japan is re-orienting its defence posture, and India is busy re-arming), or whether all parts of Asia will have been forced to adjust and accept Chinese dominance—and, if so, what that dominance might mean. As this should make clear, the next 10 years too look like being China’s decade, with India a less distant No. 2 than is the case now.
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