Demographic pattern gives India edge over China: Frenkel

Mumbai, Mar 27 (UNI) The demographic pattern prevailing in India presently gives it a huge advantage over China and this edge will last over the next few decades, said Dr Jacob A Frenkel, a renowned economist who is also the vice-chairman of global insurance major, AIG.

India's younger-aged population far outnumbers the ageing population and this will favour India's economic growth in the coming years, he said.

''India is the only big country in the world which does not have a demographic problem,'' Dr Frenkel said, while delivering a lecture on the ''World Economic System: Challenges and Prospects'' at the Reserve Bank of India today.

The one-child-per-family norm enforced in China in the past poses a huge problem to it now as it is currently faced with an increasingly ageing population. The same problem also stares countries like the US and Japan,'' Dr Frenkel said, however, pointing out that ''the problem is not so acute in the US.'' A country's demographics essays a key role in determining the well-being of a country's economy as it determines the future tax base, future spending, he said, adding that in the case of a country with an ageing population, ''it will be the young people who will have to finance benefits for the older people.'' With demographics now skewed in India's favour, there is no reason why India should not be able to perform well on the economic front in the coming years, he said.

Giving another comparison between India and China, Dr Frenkel said that migration to urban areas is very high in the case of China as compared to India. ''In 1995, the rate of migration to urban areas was almost the same in both countries but the gap has widened considerably in 2005,'' he said, while simultaneously providing statistics to buttress his point.

Dr Frenkel also pointed to the growing income disparities between the urban and rural areas in China and said that here too, the gap was considerably wider than in India.

''China has, of course, grown more in PPP terms than India but that is because of the export-focus given by its government,'' he said, pointing out that this was not the case in India.

According to him, China had no option but to focus on exports as it did not possess a local domestic market like India.

Stating that economic and political liberalisation in China would be more likely slow now because of income inequalities and social pressures, he said that ''China's economic growth has not benefitted all, the benefits are mainly limited to its coastline.'' With the difference in per capita income between China's urban and rural areas being so huge, the Chinese authorities are sitting on a ''time bomb'', he said, adding that ''social pressures'' may make the Chinese authorities to go slow on economic and political liberalisation.

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