Once, back when we were little, we all learned that Asia is the
largest and most populated continent in the world,
and that within Asia was also the most populous country on the planet: China.
However, this is no longer the case. (India overtakes China to become the
most populous country – The Guardian) Indeed, what was long predicted has finally
happened: India has overtaken China in population. According to estimates, in July 2023, India
already outnumbers China by a mere 3 million people but this gap will increase over time.
To give you an idea, experts estimate that China's population will fall steadily to
800 million by the end of the century. Meanwhile, India will reach 1.7 billion by 2060 and will end
the century with about 1.5 billion inhabitants. In other words, by the end of the 21st century,
India's population will be practically double that of China.
So what does this mean? For China, it is a challenge. For example, by 2050,
there will be 700 million workers in China, 200 million fewer than in 2011, and these
700 million will also have to face the costs of having 500 million Chinese over the age of 60,
that’s 300 million more than there are today. And, not only that, China also risks losing
one of its greatest strengths: cheap labor. Even so, we are not going to talk to you about
China: today we are going to talk to you about the new demographic champion that India has become.
A country that is still very poor and still has a long way to go to match China in terms of
economic productivity or standard of living. And, the question is, why is that? Well,
we could highlight many factors: Excessive bureaucracy, aggressive
protectionism, the caste system we recently told you about, and also its chronic inability
to develop one crucial factor for economic development: having robust infrastructure.
Which is precisely what we are going to dedicate this video to.
But VisualPolitik viewers, how did India get here? How is Narendra Modi dealing with the challenge
of a chronic lack of infrastructure? Could India become the next global manufacturing epicenter?
Which industry could put Xi Jinping's geopolitical plans in check? Today we
will answer all these questions, but first let's look at a bit of history.
And by the way, if you want to discover a unique kind of content here on YouTube
literally changing the world for the better, stay watching until the end
of this video. There, we have a special recommendation from our friends at Planet
Wild that you shouldn't miss. (THE INDIAN POLITICAL DYNASTY)
Let's start with a question that may catch you off guard:
what do you know about the history of India? Surely many of you know some facts about Mahatma
Gandhi and his commitment to nonviolent protest. And, I'm sure most of you also know that the
country was a former British colony. But... Anything else? Most probably not much more.
Typically India is only highlighted for its huge population, yet this giant is
much more than that and its history is crucial for understanding today's India.
Well, given that its independence from the British Empire happened in 1947 under the
leadership of Gandhi, India is a relatively young federal state. From the very beginning,
it had to face a very unproductive economic scenario based on subsistence agriculture;
up to 70% of the population lived on subsistence farming. However,
after Gandhi's assassination in 1948, his companion and leading independence figure,
Jawarharlal Nehru, came to power and India began its path to economic development.
India's new prime minister began to run the economy from within the State and in 1951
created the country's first five-year plan. This plan nationalized mining, the energy sector and
heavy industry. All of these were classified as strategic sectors. A strict licensing
system was also implemented, which increased the bureaucracy to an excessive degree. All this meant
that during his term of office, which lasted until 1964, the economy barely managed to grow
by 2.5%. This was insufficient to put an end to chronic unemployment, poverty and malnutrition.
Later, with the death of Nehru in 1964 and that of his successor, Lal Bahadur Shastri, in 1966,
came another of the most important figures in the country's history: Indira Gandhi. No,
she is not the daughter of the Mahatma, but of Nehru himself.
Indira Gandhi ruled from 1966 to 1984 almost uninterrupted, except for the three years
between 1977 and 1980. During the rest of the time she was lady and master of the country.
So what did she do during her two terms in office? Well, basically,
she continued with her father's economic plans: she nationalized the banking system, the coal
mines and the oil companies, among others. Even so, in spite of all this, surely the
main milestone of the Indian prime minister was the eradication, almost completely, of hunger
through the well-known Green Revolution. And what did this revolution consist of?
Essentially the introduction of crops with much higher yields, such as dwarf rice,
the widespread use of fertilizers and pesticides, and the improvement of irrigation systems.
However, in October 1984, four months after a clash between the state and Sikh separatists,
she was killed by some of her bodyguards who professed the same religion.
But, VisualPolitik viewers, if you thought that political dynasties were only a Kennedy thing,
you're wrong. Do you know who took the reins of the country after Indira Gandhi's
assassination? That's right, her son, Rajiv Gandhi. And what exactly did he do? He didn't
really change too many things, he continued the legacy of his mother and grandfather.
It turned out, however, that India managed to grow above 3% during the 1980s. And it even had
some reasonably good years. The development given the country's poverty level was nothing special,
but apparently not a disaster either. Nevertheless the problem was that this
growth had a catch to it. For years, India grew thanks to debt. And,
as happened in Latin America in the early 1980s, India suffered a financial crisis in 1990.
It was then that, in 1991, under the leadership of Prime Minister Narasimha Rao,
India began to open up to the world: bureaucracy was drastically reduced by eliminating much of
Nehru's licensing system, tariffs were lowered, and currency reserves eventually grew from $3
billion in 1991 to $25 billion in 1995. Even so, India still lacked something that
would consolidate and expand its economic growth, something that neighboring China was already
developing: infrastructure. Well, thus began the infrastructure drive in this Asian subcontinent.
Pay close attention: ("MAKE IN INDIA")
A country needs infrastructure: without roads, power plants or technology,
it is difficult for a country to prosper in the 21st century. That's why countries in Africa
are working so hard with China, because the Asian giant is providing them with
loans and assistance for building all the basic infrastructure that is essential for development.
In India, Prime Minister Atal Bihari Vajpayee became aware of all this in 1998,
and therefore launched the famous "Golden Quadrilateral" project.
It’s a project that connects by road four of the country's main cities: New Delhi in the north,
Kolkata in the east, Chennai in the south and Bombay in the west, all with a view to
improving economic exchanges within the country. But, of course, this momentum did not stop there.
His successor, Manmohan Singh, who came to power in 2004, promoted the construction
of corridors dedicated to rail freight. In fact, it made these the main focus of
the 2007-2012 five-year plan, and today two of these corridors are already in operation:
the western corridor, which is 1,500 km long, that’s 932 miles, and the eastern corridor,
which is the longest. The 1,900 km or 1,180 mile long corridor runs from Ludhiana,
the most populous city in Punjab, to Dankuni, which is part of the Kolkata metropolitan area.
However, in spite of all this, the truth is that progress was still too slow.
And of course, in such a densely populated country with extraordinarily large cities,
you can imagine what a huge problem that is: congested roads, crowded trains running at
extremely slow speeds, power cuts, problems with delivery times of goods, and so on and so forth.
Well, it was then, suddenly, in 2014 when one particular figure who we have already
told you about on this channel burst into Indian national politics: Narendra Modi.
In other videos we have already talked about how Modi is managing the country:
complaints about the violation of human rights are constant and many of his economic promises
came to practically nothing. Yet he is still a very popular politician in the country.
And one of his great efforts in particular has been and continues to be to improve
infrastructure. And not like his predecessors, but on a massive scale. All under one initiative:
the "Make in India" initiative. Launched in 2014 by Modi himself,
the "Make in India" initiative aims to make India the most important manufacturing hub in the world,
even above China. The aim is to increase the presence of the manufacturing sector from the
current 17% to more than 25%. Along the way, they hope to create 100 million jobs in this sector.
To this end, the Indian government has focused on building better infrastructure
that is capable of attracting more investment and encouraging innovation in 25 specific sectors,
including energy, chemicals, electronics and the automotive sector.For the time being,
the initiative seems to be paying off, as from FY 2012-13 to 2020-21, the main year
of the Covid pandemic, Foreign Direct Investment went from about $34 billion to touch $82 billion.
During this time, Modi has pushed for the construction of more than
10,000 km or 6,200 miles of new highways every year, more than 45 new civil airports have been
built and dozens more are under construction. New ports, new metro transport systems and
also thousands and thousands of kilometers of new railroads have been developed across the country.
The aim is to also achieve one crucial objective: to reduce the country's logistics costs,
which currently stand at 14% of GDP, to less than 8% of GDP by 2030. Efficient
infrastructure is absolutely key to the competitiveness of the industrial sector.
You see, VisualPolitik community, Modi has set the wheels in motion for India to try
to overtake China not only in population, but also in manufacturing. That is his big goal.
So for the Indian prime minister the race has only just begun.
In fact, the 2023 budget dedicated to infrastructure construction has
grown by 33% over the previous year to 3.3% of GDP, or $122 billion.
In addition, they have also decided to extend interest-free loans to 50
years for all state governments that want to invest in infrastructure.
And, not only that, investment in artificial intelligence,
especially for its incorporation into education, is also one of its
fundamental axes. Not surprisingly they will continue to invest in the freight corridors,
both in the two that are almost finished and are now operating at almost 100%, as well as in three
other projects that have already been approved. Yet despite all the infrastructure construction,
there is one problem that could drive investment away from India:
(Analysis: Dark summer nights: India faces high risks of power cuts after years of coal,
hydro power neglect – Reuters) We are, of course, talking about
electricity supply. India has been having power cuts for at least three years now,
mostly at night, due to the shortage of coal and the country’s poor and outdated infrastructure.
As you can imagine, this is a fundamental problem for the entire industrial sector.
To solve this problem, India plans to build 26 coal-fired power plants over the next 10
years. Yes, that’s what I said, coal. Be that as it may, it will most likely
take decades for India to catch up with China as the world's leading
manufacturing producer, if it ever does. Of course, this does not mean that India
will not become as crucial an economic player as China is today. There is even one industry that,
if developed in India, could disrupt many of Beijing's geopolitical plans. Check it out:
(THE GEOPOLITICS OF THE SEMICONDUCTOR)
[Host: Say this with a little irony] Here’s a question for you
hackers: what electronic component does a cell phone,
a car or even a guided missile need in order to work? I’m sure some of you won’t know,
but it is something we have already talked about on our sister channel,
VisualEconomik. If you still haven’t checked it out, I’ll leave the link in the description.
We are talking, of course, about semiconductors. And do you know which country has all
the potential to become a semiconductor production hotspot? You guessed it, India.
You see, Modi does not intend to create and boost companies from scratch in India,
but rather to attract large firms to the country. And that's not crazy either.
Think about it, they have four advantages: a large domestic market, extensive English proficiency,
a relatively cheap labor force and one of the largest pools of science, technology,
engineering and mathematics graduates. For all these reasons, it is not
surprising that we are already encountering news stories like these:
(ISMC Digital to invest $3 billion in chip-making unit in Karnataka – EconomicTimes)
(Foxconn and Vedanta to build $19 billion India chip factory – BBC)
And it is precisely this that is one of China's greatest fears.
But the question is, why? Well, as you know,
India and China are not exactly the world's best friends: they have conflicting territorial claims
and both countries aspire to become the leading regional power in Asia.
For example, China has been expanding its power in the South China Sea and,
even more worrying for India, into other Asian countries such as Pakistan and Sri
Lanka. But for its part, India has also been doing something similar,
playing on its geostrategic position in the Andaman Islands and strengthening ties
with countries such as Oman, the Seychelles and Indonesia, crucial locations that could
eventually be used to cut off the supply of crude oil coming to China by sea from the Persian Gulf.
We are talking about a budding struggle that has
inevitably brought India ever closer to the United States:
(Biden makes trade-offs and Modi steps out of
his comfort zone during elaborate state visit at White House – CNN)
But take note! This approach is not only in Modi's own interest,
but also in the interest of the Biden administration:
("The United States needs India as a strategic partner to balance against China in both South
Asia and the Indo-Pacific, and India needs the United States as it develops a more prosperous,
greener future" – Caroline Grey, analyst, Eurasia Group, 2023)
We are talking about an alliance that Washington considers absolutely key for containing China.
Not only because of the enormous economic and political influence that India will acquire
in the coming years and decades, or because this country could be a natural alternative
to the dependence that the Western world has developed towards Chinese factories,
but also for another very simple reason: Taiwan's geopolitical vulnerability.
And, you may be wondering, what does Taiwan have to do with this? Well,
a lot: remember that Taiwan is the world's largest semiconductor producer.
If Taiwanese production were to come to a sudden halt due to a possible Chinese invasion,
the world would panic and, perhaps, a major part of the economy would
also come to a halt. Semiconductors are crucial to industry around the world.
Precisely for this reason, the United States is investing heavily in this industry. For example,
in August last year, it passed legislation that included an investment of more than
$50 billion to strengthen its own semiconductor production. They are
also pushing for Taiwanese companies such as TSMC to move part of their operations there.
(TSMC to up Arizona investment to $40 billion with second semiconductor chip plant – CNBC)
Today, the United States produces about 12% of all semiconductors in the world, far behind Taiwan,
an island that also produces the vast majority of the world's most advanced semiconductors.
Well, if, as intended, chip production in countries such as the United States,
Japan and India, as well as South Korea, were to increase,
China would lose an important strategic asset. Its potential ability to threaten
Western economies with the invasion of Taiwan would be greatly reduced.
And not only that. If India manages to position itself in this field, that would probably also
encourage many technology companies to relocate their current production from China to India.
And as you can see in this whole story, infrastructure is absolutely crucial.
India needs to connect to the world and make its economy agile and affordable.
It needs professionals and goods to be able to move quickly and cheaply,
and it also needs to ensure an abundant and competitive power supply.
And now, having come this far, the questions are over to you:
Do you think India will also manage to overtake China economically, become a major semiconductor
producer and reduce the risk posed by China? You can leave us your answers in the comments.
As promised, we now recommend to you a nature protection channel that we
fully embrace. Planet Wild is unique because it shows you
how we can protect nature in simply spectacular and educational videos.
Planet Wild is a global community of people that want to give back to nature by funding
frontline nature protection work where it has a huge impact… You can also join
their fast-growing community if you feel that we should do something to
protect our planet. We are already part of this community because we support this
revolutionary way to generate a truly positive impact on our environment.
In their videos, you will learn a lot about nature while seeing what
Planet Wild does every month to protect it.. I recommend watching one of these
videos (point to the 2 end cards) in which they’re restoring a river ecosystem after
millions of fish died there in an ecological disaster or saving one of the cutest birds
from the brink of extinction. Now go check them out (point to end cards) and see for yourself.
Take care and see you next time