A Comparative Analysis

The Institute of Chartered Accountants of India(Setup by an Act of Parliament)

A Presentation by :

RONAK AGRAWALCRO-0439329

SIMRAN BATRACRO-0432268

YASH JAINCRO-0427695

ECONOMIES OF BOTH COUNTRIES

Market based system

Foreign trade and foreign investment are integral part of Indian economy

Fastest growing economy

World’s second largest labor force

Centrally planned Economy

Private businesses and capitalism were suppressed

Privatization of Farmland

Promotion of foreign investment

Flourishing small scale entrepreneurs

50 yrs ago, India and China were among the poorest and economically most isolated countries in the

world.

How did China and India emerge as

economic giants?

Comparing India and China’s Growth Stories

Indicators India ChinaPolitical System

Multi-party Democracy

One-party authoritarian rule

Speed of Growth

Economic reforms started in 1991. Average 6% growth rate in past two decades.

Economic reforms started in 1978. Average 9.5% growth rate in past two decades.

Areas of Specialization

Rising power in software, design, services, and precision industry.

Dominant in mass manufacturing, electronics and heavy industrial plants

What are India & China famous for today?

CALL CENTRES & COMPUTER ENGINEERS

LOW PRICED CONSUMER GOODS

India – Economic Fact Sheet

GDP- real growth rate: 6.5% (2012 est.) 7.7% (2011 est.) 11.2% (2010 est.)

GDP – per capita (PPP – Purchasing power parity)$3,900 (2012 est.) $3,800 (2011 est.) $3,600 (2010 est.) note: data are in 2012 US dollars

GDP – Composition by sector:agriculture: 17.4% industries: 26.1% services: 56.5% (2012 est.)

GDP – real growth rate:  

7.8% (2012 est.) 9.3% (2011 est.) 10.4% (2010 est.)

GDP-Per capita (PPP-Purchasing power parity):

$9,300 (2012 est.) $8,700 (2011 est.) $8,000 (2010 est.) note: data are in 2012 US dollars

GDP – composition by sector:agriculture: 10.1% industries: 45.3% services: 44.6% (2012 est.)

China – Economic Fact Sheet

AGRICULTURAL SECTOR

Agriculture accounted for 10.6 % of the GDP33o million- over 45% of labor force still makes living from farming.Farming methods have been improved in China.China produces wheat, rice, potatoes, peanuts, millet, cotton.Only 15 percent of the total land available in China can be cultivated.More than 75 percent of the total cultivated land is used for producing food crops.

•India is an agricultural country.•Growth of service sector is pushing down the contribution of agriculture.•Contributing 17.2% of the GDP.•Largely depends on monsoon.•Provides employment to two-thirds of the total population.•15% of export earnings•Rural women play a vital role, 50% of rural labor force. •Yields per hectare of crops in India are very low

MANUFACTURING SECTOR

•Manufacturing contributes around 15% of GDP of the country.

•India rank’s among top 12 producers of manufacturing value added products.

•There are many Companies who wants to make India as their manufacturing hub, they are:

•LG wants to make India its global manufacturing hub for its mobile handsets.

•Hyundai has make India the manufacturing & exporting hub for its small cars. Their i10 is being manufactured only in India & exported to the world.

•Chinese manufacturing sector accounts for 43% of Chinese economy.

•Its economy growth in average of almost 8% every year.

•Chinese manufacturing sector ranks 4th in the world after US, Japan, & Germany.

•China has 50% share of worldwide camera market & 30% of Air conditioners .

•25% of Washing Machines & 20% of Refrigerators.

Continued ..

•Luxury brands like Louis Vuitton are looking at India as a manufacturing base for their products.

•Skoda Auto plans to make India its regional manufacturing hub.

• Aircraft manufacturing Airbus is considering India as one of the centers for design & development of its long haul A350 plane.

•Samsung plans to invest 100 million US $ in its manufacturing plant near Chennai & make it its global hub.

•China’s fast growing domestic market worldwide demand for Chinese goods & the cost advantage China offers to manufacturers are fueling the growth of manufacturing sector in China.

•In all, China is much ahead of India in manufacturing sector

* According to Investment

Commission of India the manufacturing sector is estimated to have 180 billion US $ investment opportunity over next 5 years

Service sectorINDIA CHINA

54 per cent of GDP Below 41 per cent of GDP

Since 1978 to 2011 :Average Annual Growth rate is 8.1%

Average Annual Growth rate is 10.8%

Employment Opportunities : Low

Employment Opportunities : High

Most advanced service sector :Delhi with a GDP share of 77 per cent

Most advanced service sector :Beijing with a GDP share of 61 per cent

A net exporter of services A net importer of services

Service Sector Share over Total GDP

GDP shares by sector in China and India

CURRENCIES

Indian Rupee

Chinese Renminbi

Current exchange rate 1.00 USD, = 62.1393

Current exchange rate 1.00 USD, = 6.05990 CNY

India’s Problem

Infrastructure sector.

Insufficient investments.

Losing the best and the brightest abroad.

Constraint's in labor market needed for manufacturing Industry.

China’s Problem

Middle Income Trap (transition from middle income to high income status).

Ageing population - "one child" policy.

High domestic savings rate and correspondingly low domestic demand.

As China's per capita income rises, its 1.34 billion people will increasingly yearn for real freedom: a free press, an open Internet and, most crucially, democracy.

INDIA AND CHINA IN 2020

• According to a recent report from international economic think tanks, India and China soon plans to form a trade coalition in Asia and that is projected to boost 65% of world trade by near 2020.Both the countries India and China are determined to achieve that and create a huge impact on world economic bodies.

India’s long-term prospects look Stronger

India is no. 1 talent supplier in the world.

India's advantage in having a large pool of English speaking people.

India has the advantage of having a vibrant, energetic and creative NGO sector.

“Growth has to be aimed within a relevant

country context. India has its own unique past, a very different present, and will chart

her own version of the future. In that future, the most critical component is to

keep democracy safe.”

India shouldn’t try to grow as rapidly as China

PRESENTATION BY :YASH JAINSIMRAN BATRARONAK AGARWAL

THANK YOU.

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