The year 1947 holds a very significant place in the chapters of economics as the year witnessed India’s freedom from the British rule and Pakistan also attained independence from the same colonial government.
Most of the citizens of both the countries look towards the year as something to be proud of but unfortunately there is a hidden despair of partition as well.
Both India and the newly formed Pakistan were at the similar stage of socio-economic progress, the two independent nations were desperately poor, providing shelter to millions of uneducated and hungry people. They were about to embark on a new journey with two altogether new governments, new laws and at the same new economic policies.
Majority of people proclaim that India had started its economic journey in 1947 but, I completely disagree with this fact because to be honest, India was failing with its each and every economic decision until the 1990s.
The government of India with the fear of another foreign invasion had imposed quite a number of laws for any foreign good to enter India, the import levels were really down at that time.
There was a sense of hysteria among the leaders wherein they were trying to connect the time when the British entered India as traders and eventually ended up in enslaving the country with the current scenario, they presumed that any good coming into India from a country would result in making India a victim of another colonial government.
To make matters worse, the 1990s saw extremely bad shape of the Indian economy with famines all over, lack of food, no proper implementation of policies, Indian economy was about to collapse and would have then in due course of time been taken care of by some another country.
India began to make strong attempts to save the economy with Narasimha Rao taking over as the prime minister on 21st June 1991, by practically undoing a few impractical policies put in place by the Nehru government.
Until the 1991, the government had imposed 400 percent custom duty on a wide range of products. The big industries had to go through numerous issues for getting their product imported into India.
The Narasimha government along with Dr. Manmohan Singh a scholar economist from Delhi University who then went on to become the Prime Minister of the country brought the percentage of the custom duties to lowest possible levels, which eventually resulted in growth of industries.
The most vital and risky step by Dr. Singh was to relax all the trade barriers for foreign trade, he allowed foreign investment in India, import levels were made to rise, the Import licensing was abolished, stock market rules were relaxed, all these steps eventually saved India at a time when the country could have been again enslaved from the economic point of view. So that’s reason as to why India has practically started its actual economic journey in the year 1991.
Pakistan, started up as a new country in 1947 and was undoubtedly not easy keeping in view the law and order situation, newer challenges and with the setting up of a different government, executive and judiciary, Pakistan failed in setting up an efficient and promising economy to some levels.
Some of the prime reasons for this downfall could be the availability of less resources as compared to India and the rise of military power a couple of times, which could have hampered the economic growth.
However, Pakistan is currently aiming at the China-Pakistan Economic Corridor (CPEC) for proving to be a game changer in their economic growth as China is pumping billions of their investment into Pakistan which could actually turn into a game changer for them.
Sometime ago, China announced CPEC worth a whopping 46 Billion US Dollars, with which China seems to improve its influence in Pakistan and throughout the Central and South Asia with the plans to create oil pipeline, road and railway connectivity between China and the middle east. Due to China investing in Pakistan for creating road, railways and oil pipelines, several other countries are also looking forward on being part of CPEC.
The CPEC is undoubtedly going to be a turning point in Pakistan’s development front as well, with the coming up of roads, railways and oil pipelines, China is also aiming at creating modern cities and industrial network around these roads.
The most interesting of the three is China; it attained freedom on October 1, 1949, (2 years after India’s and Pakistan’s freedom). However, China started its actual economy journey in 1978. It encouraged its citizens to manufacture goods as much as they could; they encouraged their people to set up manufacturing units even in their backyards, which practically meant to manufacture almost everything. This step proved to be the most vital and magnificent decision by the government which led to China becoming the second most powerful economy in the world.
Since China initiated the economic reform in 1978, it has achieved an economic growth at 10 percent annually and at the same time China has lifted about 1.3 billion people out of poverty.
Infact, the Chinese economy has taken over the US economy in terms of GDP based on a measure known as purchasing power parity (PPP). The low standards of living in China is proving to be a big challenge for the United States as it allows China to pay their workers less than as to what America pays to be its workers, which eventually makes their products cheaper and ultimately forces international manufactures to outsource jobs to China.
China has built its economy on low cost exports of machinery and tools. A huge chunk of government money went into the state owned companies to accelerate the exports. Those state owned companies completely dominated their sector with incredible performance.
In a bid to attract workers China developed cities around these factories and as a result, one-fourth of the Chinese economy is in real estate and is flourishing!