Let's talk a little bit about the future and the
broader implications of this population shift. When you look
at the labor force, when you look at the
world economy, does it look more Indian than Chinese
? Now? It certainly does. But that latent
potential has to be actualized. And as you know
, there is a big lag there first, the
headline number just to be clear with India's population now
over 1.4 billion China is already beginning to show signs
of shrinking. The key difference though is not the
aggregate size, right? It's the median age,
India's population, its median age is more than a
decade younger than China is. So let's turn,
remember that China has a large population, it has
close to 700 million people below its median age.
It has a large workforce, right, as large
as any country in the world. But the headroom
, the tail winds are with India because it's so
much younger. So India and this is a perfect
follow on to your previous segment with uh with Steve
Barnett. You know, you have to think about
the labor productivity issues in the country because it's already
a services dominated economy. In terms of the share
of GDP, it has to create quality jobs.
It's still climbing up the urbanization curve which is also
a very important driver of what was China's growth miracle
over the past couple of generations. India is urbanizing
very rapidly with the young population, it's digitizing.
So again, the raw materials, if you will
, the potential of the human capital is there,
but its productivity is much, much lower of course
than China or other countries. So it really has
a lot of room to pick up. When the
Chinese Foreign Minister spokesman Wang Wen Bing was asked about
the population dividends, he was talking about quality,
not quantity. So what are we seeing right now
in terms of talent in India that could catch up
to the potential that we saw from China? Sure
. Well as you well know, there's a global
piece to it and then there's the domestic piece,
you know, domestically low labor productivity and in a
thoroughly inadequate educational system. And this is very important
to point out. Again, we are now talking
about the world's most populous country. I used to
say about China. By the way, every problem
in China is the largest problem in human history.
Well now I guess that sort of applies to India
, right? So you know, everything has to
be done at a certain scale, the scale of
infrastructure investment, the scale of digitization, the scale
of uh building out the financial services, economy and
again education to train that young population. Now we
do see heroic stories, you know, big startups
, buy juice. For example, these are global
scale uh innovative educational platforms that are moving into the
vocational space as well. But the bricks and mortar
educational system is thoroughly inadequate to the size of the
country. What sophisticated economies do is this economic master
planning where you really think about uh where the labor
force is, what its skills could be, what
the educational system in partnership with industry needs to do
, to train young workers for the jobs that are
coming out pipeline for which investment in coming is coming
in. And as you know, in in the
investment is coming into India, you have to plan
57 years ahead and align uh government industry academia,
that's not a process that India has begun to undertake
yet. And that's why there's concerns about jobless growth
and again, productivity gap, skills gap and so
forth. And the global piece, you know,
I think is very important, we can get back
to it but it's the diaspora, right? Indians
everywhere. When you talk about the middle income trap
for both China and India, you're talking about pushing
the limits of productivity, right? And we've seen
India invest in the kind of traditional, you know
, infrastructure investments, education, healthcare, this idea
of intellectual productivity. How do you achieve that for
a country like India? Well, you know,
that's where India outperforms. However, it is a
small segment of the population in the labor force,
the it sector depending how you estimate the kind of
first order versus second order inclusion, demographically is several
million people that's not very large, given the population
size. So of course, you have a highly
unequal economy. And to be clear, India is
not a middle income country in the way that China
is becoming right, India is still a developing country
, median income is far, far lower than China
. So again, a very very substantial climb that's
still needed in terms of incomes. And again,
where those jobs and wages are going to come from
is the key question and it sector, you know
, pays very well, but you know, industry
jobs don't pay that much and obviously culture very little
. And remember that India's population is still largely agrarian
and rural. So, you know, you really
with the case of India as with China a generation
ago, have to think about the the geography,
where are the people, what sectors are in?
What are the wages in those sectors? You get
a very, very divergent picture. Overall, there
really isn't quite frankly one India. However, those
fundamental investments to be clear, a lot of people
, a lot of economists make this stark distinction between
fixed capital formation, infrastructure investment on the one hand
and then, you know, services quality, uh
productivity enhancing investment on the other. That's unfair in
a way you really do have to look at the
uh the mobility that is created and the quality of
life that is created and unlocked by the kinds of
fundamental infrastructure investments that China has been making for,
you know, uh uh 40 years and India is
now starting to make look at India's fiscal uh outlays
, you know, so much of it is going
towards the basics, the bricks and mortar, the
trains, the roads, the railways, you know
, hospitals and so forth. And India does need
to do those things. And that is a platform
, right? That becomes a platform for the services
sector to continue uh to grow and thrive the way
it genuinely is in India. But again, it's
a matter of scaling it significantly and rapidly Prague which
political system gives rise to quicker, better quality economic
growth. Because you can't argue that there is that
element of more effective and certainly more direct and faster
policy making and execution for China. It's a big
question, you would even add one more layer,
right? You spoke about speed and about uh sort
of um uh quality. But it's also uh again
, scale and size. So you know, India
again has to be broken up into those dimensions.
Of course, India has become more top down command
and control. But remember, it's a highly federalized
devolved system, India independence had 14 states, it
now has 30. So it's trying to do certain
fundamental things, more centralized way that the way that
China did. Uh this is a matter of sequencing
of reforms and, and, and economic uh kind
of initiatives versus the fragmented evolutionary nature of the political
system. India is trying to overcome in a way
that fragmentation to be more China, like you might
say. But that's a loaded, obviously, uh
you know, I'm not trying to imply in some
way, although of course, many people would say
this and they're not entirely wrong that the current Indian
political system is becoming more, you know, authoritarian
, but it is still fundamentally a democratic system.
Of course, again, the correct answer your question
does depend on and it depends because speed, sure
we've seen China deliver, but that could also be
considered an outlier. And we have to remember that
quality is something that is not entirely an objective question
as well. But again, India is doing some
things, right. A lot of things too slow --> .