India and China: two radically different growth stories

IN terms of their GDP growth, India and China are sometimes viewed as being engaged in some sort of contest.

On Tuesday, the International Monetary Fund (IMF) reported in its World Economic Outlook that this year, for the first time since 1999, India's GDP growth (7.5 per cent) will outpace China's (6.8 per cent).

Bloomberg conveyed the news in dramatic fashion: "In the showdown between the world's largest planned economy and the planet's biggest democracy, 2015 will mark a turning point," it declared.

But we should be careful with such comparisons, which can be invidious and misleading. For a start, there is a huge difference in terms of the base from which the growth is being measured.

In nominal terms, China's GDP was US$10.3 trillion in 2014, while India's was US$2 trillion. In other words, the two countries - while both huge in terms of size and population - are at quite different stages of devel…