However, if priority can be given to investment in research and development and infrastructure, there appears to be ample scope, particularly in India, for increasing yields and agricultural productivity. As a result of continued rapid economic growth and increase in income per capita, demand for high income elasticity products, like milk, livestock and horticultural products will continue to grow.
China and India are committed to maintaining cereal grain self-sufficiency. The projections for both economies indicate that food security can be maintained at a national level without resorting to significant imports. The baseline scenario presented in the China study, for example, indicates that in China will maintain or surpass self-sufficiency in rice, horticulture, pork and poultry, fish and processed foods, and come close to self-sufficiency in wheat, fibre and beef and mutton.
In the case of India, despite low current growth rates of output for many crops, the expectation is that self-sufficiency can be maintained in rice, wheat, coarse grains, sugar, cattle and meat, fish and other foods. The country should also come close to self-sufficiency in other crops although the model predicts significant decline in both production and consumption of these crops and milk. However, both countries will need to adopt policies that ensure food security at a regional and household level where hunger and poverty still persist.
China's agricultural production structure is expected to shift more towards labour-intensive products such as vegetables, fruit, fish and processed foods, while self-sufficiency in land-intensive products such as oilseed, fibres and coarse grains is predicted to fall further from current levels.
The largest increases in Indian agricultural production are predicted for oilseed, sugar, fibres, milk, fish, other agricultural products and other foods, while negative or low growth rates are expected in cattle and meat, rice, wheat, coarse grains and other crops. Nevertheless, for some of the high growth products India will continue to require significant imports, especially of oilseed, fibres and other agricultural products.
The dollar-a-day-poverty index had fallen to 16 percent in China in while it was 34 percent in India. Poverty is projected to continue to decline in India. With a GDP growth rate of 8 percent or more the poverty rate should fall from 26 percent in to 14 percent in and then to 8 percent in There appears to be an implicit assumption in these figures that the reduction in poverty will come largely from growth in employment in the non-farm sector. The analysis of the Chinese experience suggests that the impact of rapid economic growth on poverty reduction tends to slacken eventually if the rural sector does not grow hand in hand.
As incomes have grown, the impact and effectiveness of general economic growth on poverty reduction have weakened. Trade liberalization, globalization, and pressures to meet WTO and FTA agreements are generating a substantial growth in trade. China will have the largest impact on Asia and the Pacific region because China's economy is two-and-a-half times larger than that of India, it is growing faster and it is more integrated with the rest of the world. FDI and multinational investments are a means of importing technology and entrepreneurial and management skills.
By China is projected to be the world's second largest importer and exporter.
How can India improve further?
At the level of the overall economy, both China and India will be major importers of energy and minerals principally from Australia, the Russian Federation and the Middle East. China is projected to drop from 92 percent self-sufficiency in energy in to 67 percent in Recognizing this as a potential constraint to growth, China is taking steps to improve efficiency in the use of energy.
The high total factor productivity TFP growth projection in the China country report indicates that reliance on energy imports can be reduced by as much as 60 percent and minerals by 50 percent. Aided by FDI and information technologies, China and India along with other developing countries are finding it increasingly easy to transfer technology from developed countries to exercise their comparative advantage in manufacturing. However, both countries have historically made low use of external resources, relative to their economic size, and national initiatives will continue to play an important role in determining their growth paths.
As noted previously, both China and India are projected to be self-sufficient in cereal grains and do not provide a serious threat to global food security. India is projected to continue its current role as a major net exporter of rice.
China Economic Growth: Cause, Pros, Cons, Future
Both China and India will be major importers of oilseed, plant-based fibre and forestry products. Soybean meal, for example, will come from destinations as distant as Brazil. In China there is already a trend in trade away from land-intensive crops such as food and feedgrains and sugar, and towards export of labour-intensive, high value commodities — horticultural crops, livestock, and aquaculture products.
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Table 1 provides a summary of the predictions of the two country reports with regard to net exports and imports in The use of different scenarios in the China report indicates that China presents considerable opportunities for other agricultural exporters under the baseline and high GDP growth scenarios, but these opportunities are significantly reduced under the high TFP growth scenario.
The Indian data, on the other hand, under-represent opportunities for catching up in productivity via technological change. Table 1. Net export share of world exports in , China and India percent. The China report examines changes in the patterns of agriculture and food trade that are likely to emerge by Interestingly, Chinese exports to India are predicted to increase by 1 percent over their level, while Indian exports to China are predicted to grow by only 79 percent.
The Indian study did not undertake a comparable analysis, but the figures presented in the China report tend to reflect the relatively narrow range of India's net agricultural exports at present — mainly rice, followed by wheat and sugar. On the import side, however, major growth in agricultural trade should come from the more developed Asian countries as well as most other parts of the world excepting Southeast and other Asian countries.
For the developing countries in Asia, China is emerging as a significant competitor in agricultural products. In particular the current trade surplus in agricultural products that the Southeast Asian region enjoys with China is predicted to turn negative. Meanwhile many Asian countries will find it difficult to compete with non-agricultural exports from India and China such as textiles, given the comparatively low wages in these two economies.
The challenges facing China and India for sustaining rapid economic growth and meeting the MDGs are similar in nature. First there is the matter of continuing to reduce poverty and hunger and maintain food security. Two other serious issues concern the widening rural-urban income gap and the degradation of the environment. Also of concern is the need to restructure agriculture and markets to meet more diversified consumer and export market food demand, and the need to adopt policies that enable both countries to maintain comparative advantage in commodity production.
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How these challenges are addressed will determine to a large degree the success in meeting the MDGs, the ability to sustain growth and the role that these economies will play in world markets. Two important questions related to achieving the MDGs of poverty and hunger reduction need to be answered. How does the growth in agriculture and in the non-agricultural economy affect poverty alleviation?
China and India: Reforms and the Response: How Differently have the Economies Behaved
What can we learn from the experience of China and India? Taking the aforesaid views into consideration, we observe in China that the TVEs provided a strong link between agricultural and non-agricultural economy which undoubtedly accounted for the sharp drop in poverty. Also fostering poverty alleviation has been the egalitarian nature of the reforms under the HRS.
By contrast, the links between the agricultural and non-agricultural economy have been less strong in India and have been hampered by a host of regulations which have slowed the development of both agriculture and industry. Overall growth in the GDP is increasing in India while growth in agricultural GDP has been declining which does not speak well for reducing rural poverty.
China and India: Reforms and the Response: How Differently have the Economies Behaved
Based on projections using the GTAP model both country studies conclude that they can meet domestic cereal grain demands without reliance on significant imports. Since the food shortages of the mids, foodgrain self-sufficiency has been a dominant feature of Indian agricultural policy. China also sets a high priority on foodgrain self-sufficiency. However, maintaining self-sufficiency in wheat production will almost certainly require improved management of water resources in the Punjab and neighbouring states and in the North China Plain.
Foodgrain self-sufficiency at the national level does not ensure food security at the regional or household level. It is a paradox that with more than million people below the official poverty line in , India is one of the leading exporters of rice. Poverty incidence is expected to continue to fall in India from But achieving this goal would appear to depend on the success of the reforms which target the growth in agriculture to rise from the sluggish 1. From the experience of both China and India, the policy implications seem clear.
Attention must be given to raising agricultural productivity and incomes in those areas that have thus far not benefited from new technologies or trade liberalization. At the same time emphasis should be on creating jobs in the non-farm sector, whether rural or urban based.
For China this will require continuing reform of state-owned enterprises SOEs and encouragement of labour-intensive private industry. India's continuing reforms should foster growth in employment in both the manufacturing and service sectors. In addition to the rural-urban income gap, especially that between agriculture and new, dynamic industries, there are regional disparities such as between the coastal and the central and western provinces in China or between the Punjab and Haryana and the states of Eastern India.
Further within regions there is the disparity between those that have become commercialized, for example through contract farming and those that follow traditional practices. Disparity in India exists between the more commercialized farmers in the Punjab and Haryana as opposed to those in Bihar and Orissa. Both China and India are committed to addressing the income gap, but the approaches will be very different. China recently approved a 15 percent increase in the money earmarked for agricultural development, and rural services. Also China has initiated the "Five Balanced Development Strategies: balanced development between rural and urban, between economic growth and social progress, among regions, between human intervention and environmental conservation, and between internal and external economies.
The UPA Government came to power in India in May and the National Common Minimum Programme forms the bedrock of economic policy with the highest priority for agriculture and a holistic approach to agriculture and rural development.