In 1960, the average Japanese citizen earned $519 a year. The average South Korean earned $159 – poorer, per head, than much of sub-Saharan Africa. In 1978, the average Chinese citizen earned $157.
None of that is a typo. All three economies that are now held up as growth models in India and emerging economies started from poverty. India’s best performance in GDP growth is yet to match the best performance of the trio – in absolute height and in duration of momentum. Debates on growth are a testimony to the old proverb that goes, ‘ Jungle me Mor nacha kisne dekha ‘. That’s worthy of applause. Neither is the number that actually made a poor country rich was achieved in one working lifetime. Not for a quarter. For years, over and over, until it stopped being news. Japan hit it seven times through the 1960s alone, the tightest cluster of the three. The consequence of high growth momentum is best illustrated in the rise in per capita income. The China-India comparison has been narrated by this column often, but bears repetition. Both countries were in the throes of opening up their economies. It is known that economies often accelerate beyond expectations in seasons. Growth spurts from a terms-of-trade windfall or a burst of capital inflows. Sustaining the high growth calls for structural change to lay the foundation, pave the path, and scaffold transition. India is a live paradox – growth is high, GDP ranks at 6th in the world, yet per capita income trails at the lower half of the table between smaller economies like Cambodia and Kenya. The crux of India’s high-growth-low-per-capita -income paradox is where the workforce resides. His answer outlived the paper it appeared in: “The consequences for human welfare involved in questions like these are simply staggering: once one starts to think about them, it is hard to think about anything else. Structural change calls for sustained investment in human infrastructure. This week, the world observed International Literacy Day. Taiwan, Singapore, and Hong Kong ran variants of the same playbook. It is the part that folks skip in debates on growth. Different countries approached the objective of structural change for sustained growth from different frameworks. No plan was identical. What did they do? Japan ran land reform, broke up the zaibatsu , and set up the MITI, which played a critical role in intra-firm competition and collaboration. Korea corrected an overvalued currency, freed deposit rates to pull in savings, supported export credit, and pushed investments in heavy industries. Taiwan financed private exporters off of state-owned steel and petrochemicals, with protection earned only for those expanding the global footprint. Tailoring of policy to guide private sector resource allocation was a common theme in Japan, Korea, and Taiwan. The ‘must-do’ list for India to lock onto a high-growth train is scarcely a secret – the diagnosis and the prescription have been written and rewritten for decades. As it turns out, three decades after liberalisation, India’s largest private sector is yet to be liberated – both inputs and output are vulnerable to the whims of politics. For now, it is lower than that of agriculture despite a parade of programmes by successive governments. There has been no dearth of ideas – the one-district-one-product, the industrial corridors, the SEZs, the declarations of cluster development are all between announcement and lift-off for critical scale. Expansion requires additional resources, and FDI flows have flattered and deceived. There is nothing esoteric about the recipe for sustained high growth. It is not the rise or the fall, but the aspiration and commitment that define the approach. Growth is good.
Because it has yet to deliver the momentum that provided escape velocity to Japan, Korea, and China, india left poverty behind a long ago, but it has struggled to catch up with prosperity and high-income status. Because the farmers could read the manual, the factories had somewhere to put the farmers only. India grew 7.8% in the April-June quarter of 2026, the fastest print in five quarters – the debate or the smell test on the data will probably continue all the way into the first quarter of 2027. India, by most estimates, is the fastest-growing large economy in this decade, averaging around 8% post the pandemic. That number is 10%. China hit 10%-plus growth in 16 separate years between 1978 and 2010 – a 33-year span. South Korea hit it in 16 years between 1966 and 1999, almost the same length of time. Growth is good, but India needs greed for 10% momentum growth. In 1960, South Korea’s income per person was lower than Kenya’s – not folklore, literally true in the World Bank’s own data. Korea’s own double-digit run began in 1966 with the GDP at $ 4.0 billion and per capita income at $134 a head. In 1999, its GDP was at $515 billion and per capita income at $11,063. Today, it stands at $36,227 a head, 228 times where it started. Japan’s run began from a higher base at $622 per person in 1961. By 1970, it was at $2,145 a head, and today stands at $35,951 – a near-70-fold rise from where it started. In 1991, China’s per capita income was at $334, and that of India was $305. Today, the per capita income of India hovers around $ 2,810, and that of China stands at $13,862. Over 45% of the working population depends on agriculture, yielding 16% of the national income. The Niti Aayog tells us that 58.4% of the workforce self-certify themselves as self-employed and 19.8% as casual workers. India’s national average is Rs 2.35 lakh. The average really represents a notion – the geography of India’s per capita economy stretches from Karnataka at Rs 3.80 lakh to Bihar at Rs 66,828, which is less than a sixth of Karnataka’s and just over a fourth of the national average. Robert Lucas, the Nobel laureate who studied the question of why some nations grow while others don’t, asked, in 1988: “Is there some action a government of India could take that would lead the Indian economy to grow like Indonesia’s or Egypt’s? In the 80th year of Independence, India’s literacy rate stands at 81% – lower than the global average of 88%. Indonesia reached 82% in 1990 and is at 96% today; China, which has a comparable population size and complexities, reached 90% literacy in 2000 and is at 97%. Korea’s elementary-school enrolment rose to 90% by 1964, an investment that built capacity for the heavy industry push. NITI Aayog’s report titled Reimagining Skilling for Viksit Bharat@2047 reveals that 8.7 crore (87 million) young Indians aged 15 to 29 are classified as NEET – meaning they are not in education, employment, or training. The World Bank’s 1993 report on the East Asian Miracle and its 2008 Growth Report tracked economies and found 13 that grew at 7% or more for 25 years between 1950 and 2008. China freed its farmers first, priced light industry to the market while still planning heavy industry, and kept its Special Economic Zones contained until they had proved themselves – then waited two decades, until 2001, to join the WTO. For three decades, India’s governments have been musing and mulling taking the share of manufacturing to 25% of GDP. Gross fixed capital formation hovers at around 32% of GDP. In contrast, Japan, Korea, and China sustained 40-plus-percent rates through their double-digit decades. The distance between committees and commitment is why the 7% figure keeps arriving and departing without evolving into a 10% habit. None of the economies had a smooth run – Japan’s double-digit run got hit by the oil shock in 1973, Korea posted recessions in 1980 and then again during the Asian Contagion, China slowed down in 1989 and again in 2008. India must applaud achieving 7.8% GDP growth. It must also find the appetite compounding growth for momentum – greed for 10% is what turns good quarters into real prosperity. (Shankkar Aiyar is a political economy analyst and author) Disclaimer: These are the personal opinions of the author
Vietnam is trying to write itself into the same paragraph now: 8% growth in 2025, an official target of 10%-plus through 2030, and a Communist Party leadership that calls the number a “must-do”. The need to liberate agriculture was recognised by Jawaharlal Nehru, who had famously said, “Everything can wait but not agriculture”.
If a large part of the working-age population is not in the labour force, it will show up in consumption figures. it is neither directed by opportunity nor by skills; the migration is towards low-productivity urban services, such as the grey-blue army of security guards Although farm workers are leaving the farms. World over, businesses build moats to prevent easy entry for competition. In India, the cholesterol-ridden regulatory regime is its own moat that deters new investments. All the government’s committees and commissions have not been able to get the regulatory Humpty-Dumpty off the statute.
There are other troubling signs – only 32.8% of working-age Indian women are in the labour force, among the lowest rates of any large economy.
