INDIA – How It is
India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization measures, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and have served to accelerate the country’s growth, which averaged under 7% per year since 1997.
India’s diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the workforce is in agriculture, but services are the major source of economic growth, accounting for nearly two-thirds of India’s output, with less than one-third of its labor force. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services, business outsourcing services, and software workers.
In 2010, the Indian economy rebounded robustly from the global financial crisis – in large part because of strong domestic demand – and growth exceeded 8% year-on-year in real terms. However, India’s economic growth began slowing in 2011 because of a slowdown in government spending and a decline in investment, caused by investor pessimism about the government’s commitment to further economic reforms and the global situation. High international crude prices have exacerbated the government’s fuel subsidy expenditures, contributing to a higher fiscal deficit and a worsening current account deficit.
In late 2012, the Indian Government announced additional reforms and deficit reduction measures to reverse India’s slowdown, including allowing higher levels of foreign participation indirect investment in the economy. The outlook for India’s medium-term growth is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy.
India has many long-term challenges that it has yet to fully address, including poverty, corruption, violence, and discrimination against women and girls, an inefficient power generation and distribution system, ineffective enforcement of intellectual property rights, decades-long civil litigation dockets, inadequate transport and agricultural infrastructure, limited non-agricultural employment opportunities, inadequate availability of quality basic and higher education, and accommodating rural-to-urban migration.
THAILAND – How It is
With a well-developed infrastructure, a free-enterprise economy, generally pro-investment policies, and strong export industries, Thailand achieved steady growth due largely to industrial and agriculture exports – mostly electronics, agricultural commodities, automobiles and parts, and processed foods.
Thailand is trying to maintain growth by encouraging domestic consumption and public investment to offset weak exports in 2012. Unemployment, at less than 1% of the labor force, stands as one of the lowest levels in the world, which puts upward pressure on wages in some industries. Thailand also attracts nearly 2.5 million migrant workers from neighboring countries. The Thai government has implemented a nation-wide 300 baht ($10) per day minimum wage policy and deployed new tax reforms designed to lower rates on middle-income earners.
The Thai economy has weathered internal and external economic shocks in recent years. The global economic crisis severely cut Thailand’s exports, with most sectors experiencing double-digit drops. In 2009, the economy contracted 2.3%. However, in 2010, Thailand’s economy expanded 7.8%, its fastest pace since 1995, as exports rebounded. In late 2011 growth was interrupted by historic flooding in the industrial areas in Bangkok and its five surrounding provinces, crippling the manufacturing sector. The industry recovered from the second quarter of 2012 onward with GDP growth at 5.5% in 2012. The government has approved flood mitigation projects worth $11.7 billion, which were started in 2012, to prevent similar economic damage and an additional $75 billion for infrastructure over the next seven years which started in 2013.
INDIA VS THAILAND
Comparing the economy of the two counties helps in understanding various economic functions of the country. One of the best ways to do so is to lay down the table for a better comparison. Mentioned below is a table of comparison between different economic aspects of India and Thailand:
|Budget||$172.10 billion||$72.08 billion|
|Debt||49.6 CIA||43.3 CIA|
|Exports||$301.90 billion||$226.10 billion|
|GDP||$1.84 trillion||$365.97 billion|
|GDP(Per Capita)||$2,625.09 per capita||$8,655.90 per capita|
|Gross National Income||$477.00 billion||$477.00 billion|
|Rate of Inflation||9.7%||3%|
|Below Poverty Line||9.8%||7.8%|
|Rate of unemployment||8.5%||0.7%|
|Per Capita of Exports||$244.12||$3,385.49|
|Per Capita of Import||$407.14||$3,261.21|
|Tourist visits||5.37 million a year||14.54 million|
|Gross domestic Savings||212.41$||212.41$|
|Discount rates from the central bank||5.5%||2.75%|
|Spending of consumers||121.54%||111.85%|
|Labour force rank in the world||18th||28th|
INDIA – THAILAND Economic and Commercial Relations
As per the calculations of 2018, the Gross Domestic Product of Thailand is US$ 504.9. The country has the second-largest economy in South East Asia. There is a deep-rooted connection found between India and Thailand which can be traced back to history. For years the two countries have been maintaining harmonious relations. In the year 2017 Thailand and India proudly celebrated their 70 years of diplomatic relations. Over the years India and Thailand have developed strong connections while establishing a very strong bilateral relationship.
For years the two countries have been continuing their trades with each other. In the year 2018, the two-way trade totaled up to the US $ 12.46 billion. According to Thailand, India is one of the largest partners in trade. AEC is one of the main reasons for such a harmonious relationship between the two countries. AEC took several initiatives to develop economic and cultural connectivity between the two countries.
- The investors in Thailand are keen to invest in India. This is because India has a promising economy. With the rapid growth in the economy of the country, Thai investors find a major interest in investing. The market in India is one of the major export targets of Thailand. With the number of buyers in India, Thai businesses find it lucrative to invest in the country. Under the Association of Southeast Asian Nations (ASEAN) there is a huge reduction of tax which is encouraged by India when it comes to the export goods of Thailand. This is an important factor that contributes to the growth of business in Thailand.
Some of the major exports by Thailand to India include parts of motor vehicles, data processing machines, integrated circuits. Alongside Thailand also exports stones and jewelry, chemical products and plastic products to name a few. For India, Thailand is also a lucrative market. The import of products for Thailand from India includes crude oil, chemicals, jewelry and various other product that benefits the business of India. In recent times it is seen that there is a huge growth in the investment from Thailand. As there is a growth in the economy of the country there are many investors in Thailand who are willing to invest in the country. Some of the major brands of India that are successfully functioning in Thailand include Tata, ZEE TV, Thermax, Dabur, Lupin, Ranbaxy and many others.
Economic Comparisons – Highlights
If you are living in Thailand then the chances are that you will be earning 2.5 times more money in the country as compared to India. This is due to the growing economy that contributes to the GDP of the country. Thailand also has a high chance of employment as compared to India.
According to a report if you are living in Thailand then there are 92% fewer chances of you being unemployed. This is an indicator of the fact that Thailand has a very high employment rate. Alongside the country would offer you 67% lesser chances to be in the below the poverty line.
However, one of the major disadvantages is the fact that in Thailand the cost of healthcare is high. You may have to spend 38% more in healthcare as compared to India. With 2.6 times more chances to be obese and being exposed to certain life-threatening diseases like HIV/AIDS, there are huge chances that health care investment would shoot up to a major extent.
However, the quality of life in Thailand is much higher as compared to India. The availability of basic needs is comparatively high in Thailand. This comparison helps in understanding the ways there are certain pros and cons of living in both countries.
However, the lifestyle of both countries is almost similar. When it comes to the urban lifestyle of the countries it is seen that there is a huge similarity between the two. This helps in understanding the fact that both countries have similar influences. These countries are highly influenced by western civilization. This is a common sight that is seen in the cities of both countries. With minor differences, both countries share a similar ideology.
When it comes to commercial comparison one of the most important aspects that need to be considered is the cost of living. There is a huge difference in the cost of living between the two countries. The consumer prices of Thailand as compared to India is 96.81% higher.
The rent prices are also higher in Thailand. It is being estimated that the cost of Rent in Thailand is 113.96% higher than that of India. So it can be stated that while you have decided to live in Thailand there are chances that your budget will increase. You will have to spend more for various purposes. The most expensive thing in Thailand is rent. The rents in the country are exorbitantly higher. This will add up to the total cost of living. However, comparing the standard of living Thailand excels in various aspects.
A detailed comparison of various economic aspects of the two countries unveils several aspects of the country. Lastly, it is also necessary to make a cultural comparison as culture forms an important part of the relationship between countries and also encourages trade.
There are several similarities between India and Thailand. There is a deep-rooted connection between the cultures of the two countries. Khom is one of the oldest manuscripts of Thailand. However, the manuscript was deeply connected with the Hindu culture. This is one of the reasons why there are major similarities between the cultures of the two countries.
For instance, Sabai is a traditional attire of Thailand worn by women. This is very much similar to Saree which is being draped by Indian women. Jong- Graben is traditional attire for men and this is also similar to Dhoti which is a traditional men’s wear.
People in India join their hands in the form of prayer to welcome and greet people. This gesture is known as “Namaste” in India. A similar gesture of welcoming guests is followed in Thailand too. This is known as Sawasdee. There are several other similarities between the two countries. Understanding the similarities between the culture of the two countries revel several other aspects of the economy. This helps in understanding the fact that India and Thailand are deeply rooted in culture and the cultural exchanges that occur from time to time help in the development of better relationships.
Andy Aditya, an Indian, in Thailand for over two decades is a perfect guide for you to for doing business in Thailand. He has represented over 16 such Indian companies to do business in Thailand and may represent you in ASEAN as a Virtual Director.
Contact him for advice and execution of your business plans.
Interesting Reads :
- Why Thailand Is A Good Business Destination
- Business in Thailand – How Different it is from Rest of the World
- Thailand reforming itself for doing business easier in Thailand
- Growth of Startups in Thailand and Future Outlook
- What you should consider before doing business in SE Asia