India gained independence in 1947 and China emerged as a new country in 1949. Both faced similar challenges. But on the economic front, India was a few places ahead of China. In the 80s, India’s GDP was higher than China’s.
After that the leaders of China made some decisions, this neighboring country of India is now a superpower. In terms of economy, China is now almost four times ahead of India. China is now called the factory of the world.
Now you might be wondering how did Mao Zedong’s country of China with communist socialist ideals suddenly develop, you have to understand the formula of one of the leaders there, Deng Xiaoping. After Mao, Feng took over the power of China. Fung was also a leader of the Communist Party of China.
Deng Xiaoping went beyond Mao’s thinking and freed China from the socialist economic model. Deng Xiaoping believed that China could not develop without capital and that the economy would have to be opened up. In Mao’s China, where opening the doors to foreign capital was nothing short of a coup, Fung explained that as long as the cat is hunting the mouse, it doesn’t matter if it’s black or white. Meaning is capital needed and should it come into the country through some route?
What is the ‘Lewis Model’?
In 1954, economist William Arthur Lewis proposed a model of “economic growth with an unlimited supply of labor.” Lewis said that the agricultural sector is labor intensive and earnings are low. If this surplus labor is diverted to industries by giving more money, progress can be brought.
Factories should be set up in small towns and villages. If money comes into the pockets of those working in them, the purchasing power will increase and this will increase the demand in the market. That is, the goods made in the factories will be sold. China’s huge population will make its own factories available in the market.
Lewis’s model was based on the assumption of economic growth or economy through an unlimited supply of wages. This model was divided into two parts i.e. capitalist and subsistence sector.
Understand the Lewis model in simple terms.
A company should hire 6 people instead of 10 people and take the same amount of work from them as is being taken from 10 people. In such a case, the salary given to 4 people will be saved and this capital can be saved and used elsewhere. Using this model, the rest of the workforce can be relocated by building and working in other factories or expanding old industries.
How did China use the Lewis model?
China is at the forefront of developing its economy using the Lewis model. China benefited from this model in two ways, first by using its population and secondly by the labor of the villagers.
Using this model, China expanded its market by promoting domestic industries and attracting investors by making essential goods available at low prices.
Using this model, China was able to invest more in infrastructure, education, and research and development, which increased China’s productivity and competitiveness, leading to rapid industrialization in the country, reduction of poverty. And the economy changed massively. Today, China is supplying goods to the whole world from its factories. Many economies of the world depend on it.
Why this model has not been adopted in India?
After independence, India ran on the basis of a socialist economy. In the 80s, China took a different path from here. However, India is still a country whose economy is based on agriculture.
Now the question arises why this model could not be implemented in India? One of the reasons for this was that Mao’s rule was completely authoritarian.
The Great Leap Forward, which led to indiscriminate industrial growth, led to famine in China. Farming was taken away from the people due to which there was scarcity of grain.
The result was that four crore people died of hunger in this country. At the same time, democracy in India was struggling and remained strong in its own soil. In any democratic country, it is not in the power of governments to commit such atrocities.
On the other hand, China was screaming. Although the path proposed by Deng Xiaoping was different from the mood of socialist China, it was something new for the people there. The starving ones didn’t even have enough strength to oppose Deng Xiaofeng’s words. In fact, China was tired of Mao’s socialism.
But the situation in India is completely different from China. Lewis’s model cannot be applied here. In India, the monsoon rains are the biggest challenge for farming here, while in China it rains all year round. Farming is easier in China than in India.
China also benefited from Mao’s socialist model. In the 70s, China had far surpassed India in terms of education rate and life expectancy.
India’s biggest problem after independence was to unify all the princely states and kings. China, on the other hand, had no such problem. He was already organized.
China carried out economic reforms through land redistribution. There is no land owner left. Community farming was started. Such experiments in farming have never been done in India.
While China has succeeded in identifying surplus labor through organized agriculture, this has never been attempted in India. Although economic reforms in India started in 1991, this step was taken under duress.
Gujarat is close to this model.
However, Gujarat is the only state in India to follow the Lewis model. Here, a large number of workers have shifted from agriculture to factories.
However, the proportion of farm laborers here is higher than that of Punjab, Haryana, Kerala and Tamil Nadu. In Gujarat, 24 percent of workers are employed in factories or some form of manufacturing sector, double the national average.