India, China & Pakistan — Reform Paths & Demography

8.1 Introduction — Why Compare India with Its Neighbours?

This is the closing chapter of the book. Through Units I to III you have studied India's developmental experience in detail — colonial inheritance, planned development since 1951, the LPG reforms of 1991, human capital, rural India, employment and the environment. Unit IV now widens the lens. In a globalised world where geographical boundaries are losing economic meaning, neighbouring developing countries must understand each other's strategies because they share the same limited economic space in world markets. We will compare India with two strategically vital neighbours — People's Republic of China and Pakistan.

Nations are forming regional and global economic groupings — SAARC, ASEAN, European Union, G-8, G-20, BRICS — to strengthen their domestic economies. They are also keen to comprehend the developmental processes of their neighbours, because all major economic activities in a region impinge on overall human development in a shared environment. India, with the largest democracy in the world wedded to a secular and liberal Constitution, sits beside the militarist political setup of Pakistan and the once-command economy of China. Comparing them shines a light on which strategies have worked, where, and why.

8.2 Developmental Path — A Snapshot View

Surprisingly, India, Pakistan and China have many similarities in their developmental strategies. All three nations stepped onto the developmental path at almost the same time. India and Pakistan became independent in 1947; the People's Republic of China was established in 1949. Speaking around that time, Jawaharlal Nehru observed that the new and revolutionary changes in China and India, even though they differed in content, symbolised the new spirit of Asia.

All three countries began planning their development in similar ways. India announced its First Five Year Plan for 1951–56, Pakistan launched its first five year plan (now called the Medium Term Development Plan) in 1956, and China announced its First Five Year Plan in 1953. Since 2018, Pakistan has been working on its 12th Five Year Development Plan (2018–23), while China is currently working on its 14th Five Year Plan (2021–25). India followed a Five Year Plan-based development model until March 2017. Until the 1980s, all three countries had similar growth rates and per capita incomes — the divergence is a recent phenomenon.

8.2.1 China — From Communes to Market Reforms

After the establishment of the People's Republic of China under one-party rule in 1949, all critical sectors of the economy — enterprises and lands owned and operated by individuals — were brought under government control. The Great Leap Forward^? (GLF) campaign initiated in 1958 aimed at industrialising the country on a massive scale. People were encouraged to set up small industries in their backyards. In rural areas, communes were started under which people collectively cultivated the land. By 1958 there were 26,000 communes covering almost all the farm population.

Today's fast industrial growth in China traces back to the reforms introduced in 1978 under Deng Xiaoping^?. China introduced reforms in phases. In the initial phase, reforms touched agriculture, foreign trade and investment. Commune lands were divided into small plots which were allocated (for use, not ownership) to individual households — the household responsibility system^? through decollectivisation^?. Households kept all income from the land after paying stipulated taxes.

In the later phase, reforms moved into the industrial sector. Private firms in general, and Township and Village Enterprises (TVEs)^? in particular — owned and operated by local collectives — were allowed to produce goods. State Owned Enterprises (SOEs), which Indians call public sector enterprises, were made to face competition. The reform process also involved a famous dual pricing system: farmers and industrial units bought and sold fixed quantities at government prices, while the rest was traded at market prices. Over time, the share traded at market prices increased. To attract foreign investors, Special Economic Zones (SEZs)^? were set up along the coast.

8.2.2 Pakistan — A Mixed Economy with Many U-Turns

Pakistan also follows the mixed economy model with co-existence of public and private sectors. In the late 1950s and 1960s, Pakistan adopted a regulated policy framework for import substitution-based industrialisation — combining tariff protection for manufacturing of consumer goods with direct import controls on competing imports. The introduction of the Green Revolution brought mechanisation and rising public investment in infrastructure in select areas, raising foodgrain production and dramatically changing the agrarian structure.

In the 1970s, Pakistan nationalised its capital goods industries. Then in the late 1970s and 1980s, it shifted policy orientation again — this time toward denationalisation and encouragement of the private sector. During this period it received financial support from western nations and a continuously increasing inflow of remittances from emigrants to the Middle East. This stimulated economic growth, and the government also offered incentives to the private sector — creating a conducive climate for new investments. Finally, in 1988, formal reforms were initiated.

8.2.3 India — The Mixed-Economy Democracy

You have already studied India's policies in Units I–III. India is the world's largest democracy, with a secular and liberal Constitution. It has followed a mixed economy with a large public sector and substantial public expenditure on social development. Its planned development began with the First Five Year Plan in 1951 and continued until March 2017, when the planning commission was replaced by NITI Aayog. Reforms came in 1991 — but unlike China, they were not a domestic initiative; they were precipitated by a balance-of-payments crisis and conditions imposed by the IMF and World Bank.

8.3 Demographic Indicators — Reading Table 8.1

Out of every six persons living in this world, one is an Indian and another a Chinese. Pakistan, however, has a much smaller population — roughly one-tenth of China's or India's. China is also the largest geographically among the three, yet has the lowest population density. Let us examine the latest data carefully.

Source: World Development Indicators 2024.

8.3.1 Population Growth and the One-Child Norm

Population growth is highest in Pakistan (1.96%), followed by India (0.81%), with China registering a small decline of −0.10%. Scholars point to the One Child policy^? — the one-child norm introduced in China in the late 1970s — as the major reason for low population growth. However, the same policy led to a fall in the sex ratio^?, the proportion of females per 1000 males.

From Table 8.1, you can see that the sex ratio is low and biased against females in all three countries — 930 in India, 898 in China and 948 in Pakistan. Scholars cite son preference prevailing in all these countries as the underlying cause. In recent times, all three are adopting various measures to improve this. The one-child norm has another implication: after a few decades, China will have more elderly than young people. This is why China has now allowed couples to have two children.

8.3.2 Fertility, Urbanisation and Density

The fertility rate^? is also lowest in China (1.2) and very high in Pakistan (3.4); India sits at the replacement level of 2.0. Urbanisation is high in China (65%) — almost double that of India (36%) — while Pakistan stands at 38%. Density tells a complementary story: India is the most densely populated at 473 per sq. km, China the least at 150, with Pakistan in the middle at 300. China's lower density reflects its much larger geographic area; nearly all of China's population is concentrated in the eastern coastal provinces.