Has India Regained its Shine?

There is, once again, widespread excitement about the prospects of the Indian economy. This comes on the heel of news that India’s Q3 growth has now marginally edged above China’s, after a statistical adjustment. Can we now expect the Elephant to replace the Dragon as the motor of the world economy?

At times like these it helps to take a longer term view. Assembling GDP growth data since 1960 from the World Bank and taking a moving average of 5 years, I made the following two graphs of the longterm economic performance of the world’s two demographic giants.

The comparison does not come out well for India. It has underperformed China without break, even when China was ruled by Maoists who made Soviet central planners look like paragons of competence by comparison. (The dip at the very beginning is an artifact of the Great Leap Forward and the ensuing chaos and famine). The Licence Raj might not have exactly been a panacea either, but at least markets functioned, and that alone should have made conditions for economic growth orders of magnitude better. Even though China is now about two and a half times richer per capita than India in PPP terms, there are no signs of convergence even to this day, as India continues falling relatively behind.


The difference is, if anything, even more profound when you adjust for population growth, which has been systemically higher in India than in China since the 1970s.

india-china-gdp-per-capita-growth-1965-2014Will India’s growth rate eventually converge with and overtake China’s? That is almost certain, since relatively poorer countries should in theory be able to grow much quicker than richer one’s by buying/stealing knowhow. The main question is how long will it take: Will it happen in the next few years? Or a decade? Or a few decades?

Increasing numbers of economists are coming round to the view that human capital is the main, overriding determinant of economic growth. According to my own calculations, there is an astounding R2=0.84 correlation between PISA-derived national IQs and GDP (PPP) per capita amongst countries that do not benefit from a resource windfall or suffer from a Communist economic legacy. Unfortunately, India’s IQ appears to be very low, somewhere in the low 80s, so I remain very skeptical of its prospects for becoming a second China.

Still, I don’t want to come off as an India basher. There are a few factors working in its favor too. First, it’s got a very substantial “smart fraction,” i.e. it has relatively more bright people than you would expect from the standard bell curves you have in more homogenous countries. Thank the caste system for that. As Heiner Rindermann showed, smart fractions have a disproportionate effect on a country’s overall economic performance. Furthermore, Indian IQs might be even more environmentally suppressed than in Sub-Saharan Africa. India has comparable rates of malnutrition, likely worse sanitation and hyeginic standards, and more inbreeeding. All this might sound bad and it is but that likewise creates the potential for very rapid improvement, should a strong and capable hand be there to help it along.

In this respect, India is lucky to have gotten Modi.


  1. I think that many Westerners have the unfortunate tendency to overstate India’s potential.

    We mustn’t forget that the average IQ of India is only 82 and oftentimes the standard of living in India is barely different than that among blacks in Sub-Sahara Africa.

    I have lived both in India and Africa (with my parents), and I can safely say that the quality of life in India is only barely better than black Sub-Sahara Africa. I don’t think that many Westerners truly realize how corrupt, dysfunctional and dirty India is. I mean, at our local river we’d actually see dead bodies and feces floating by on a regular basis.

    The real potential lies with China, not India.

  2. Kibernetika says

    In near-term IT/CompSci, the ICPC results are always a good proxy predictor, IMHO:


    Adjusting for population, and my experience, India doesn’t fare so well.

  3. India will always be next year’s story. Plenty of smart people, but absolutely no social cohesion beyond family networks.

  4. Nice chart! One picture worths thousands words. Visual spacial display always outperform verbal arguments, at least for visual spacial people. Pure verbal arguments are for pseudoscience, religions or ideologies. The pure verbal arguments like this post has no place in science.

    Some time you wonder whether verbal people’s intelligence has any value except manipulating stupid other people. Good verbal skill definitely make good saleman or scam artist (depending on whether you can figure out the truth or not).

    Personal anectdote: I have visited India as tourist. There is definitely a small fraction in that society based on the sophisticated designs of ancient castles in Rajsthan. My speculation for India will be always big gap in society with low mean and extreme high outliers.

  5. India is worse off than subsaharan Africa not only in extreme malnutrition/hunger, sanitation and hygiene, inbreeding, living conditions, living space etc but also in per capita income:



    It makes more sense to compare India (or south asia in general) to Africa than to China.

  6. So based on your reading and the fact that Indians in all non islamic countries from Trinidad to Singapore have a higher per capita income than the native population.(Indicating the smart fraction is atleast 15-25% of the population) what is your assessment of Indian per capita income by 2025 ?

  7. We mustn’t forget that the average IQ of India is only 82

    It is convenient to forget facts that don’t fit the narrative. Thus “race realists” conveniently ignore the fact that the IQ data they swear by shows that african-american IQ equals or exceeds that of indians, arabs and persians:

    IQ of african-americans living outside the South: >90
    Average IQ of all african-americans: 85
    Syrian IQ: 79
    Saudi IQ: 80
    Lebanese IQ: 82
    Indian IQ: 82
    Iranian IQ: 84
    Serbian IQ: 89

    Note that south asia and MENA is home to some 2 billion people or the great majority of what is lumped together as the caucasoid race.

  8. A lot of Dunning-kruger effect in this kind of things due to low IQ of average indian and western mainstream media. Indian like to over-estimate/bragging, which was taken for granted by similar minded Westerners. People with similar mind-set really appreciate each other.

  9. A lot of Dunning-kruger effect in this kind of things due to low IQ of average indian and western mainstream media. Indian like to over-estimate/bragging, which was taken for granted by similar minded Westerners.

    Wrong explanation. The “average Indian” has zero access to western media and zero contact or influence with westerners (“similar minded” or otherwise.) The people in India who create all the hype have pretty high IQs (by world standards, not Indian); they are savvy people who are good at advertising, and they know and expect exactly the effect you see. They are not bragging out of ignorance; they are creating a narrative that is in their interest.

  10. I think the problem with India is that, unlike the Chinese who have a very high floor when it comes to IQ, Indians have a very low floor. So even though the very top portion of India can be very bright, the bottom portion can weigh down the entire country.

    I see a future where India can either relax caste rule, and see a homogenizing of iq. Which would mean a slightly higher iq for the masses, but not too much of an uptick because of the huge numbers of lower IQ Indians. Or I see not much changing in India, with an elite that is very capable but overall not being able to function much on the world stage.

  11. I do not know your opinion is based on speculation or observation.

    My personal anecdote (or observation) with south Asian colleagues (mostly likely representing the smart outliers of south Asians) are very critical of India (or you will call it self-hate). Certainly these south Asians are visual/spatial smart types. Not verbal types like Zakaria. But average folk I encountered in India are very confident, self-assured, extremely optimistic.

    This should be a subject worth of further research.

  12. Cast rule is slowly being relaxed. I don’t think it’s a very good thing, though, since India (similarly to Western Europe etc.) has lost selection in favor of higher intelligence, which means Indians (just like everybody else, with the possible exception of Africa) are getting dumber and dumber. (It’s possible that in Africa selection for intelligence hasn’t stopped because of the still forceful Malthusian effects there, so Africans are probably not getting much dumber, although probably with the advent of Western medicine, vaccinations etc. there’s probably much less selection in favor of intelligence than previously, too. It would be interesting if Africa would be the only continent left where there’s still some selection in favor of intelligence, and slowly the dumbest continent would become the smartest.)

  13. Reiner.

    I think India is interesting because with 1.5 billion people and a very narrow top portion with high iq, it wouldn’t take much or very long for the top portion to be a mixed into the low iq masses.

    The average iq would barely move with so many people and I don’t think India would ever recover.

    I don’t think that will happen, but at the margins India could quickly see itself erode.

  14. By GDP India has significantly fallen behind China.

    In 2013, the World Bank estimates for GDP per capita (nominal rather than PPP adjusted) that India had a per capita of 1509 versus a per capita in China of 6959.

    In 15 years the gap will grow from 4:1 now to 8:1.

    I take into account currency depreciation and appreciation which is routinely left out in discussion about future GDP.

    The Indian currency will probably depreciate from 60 to 1 us dollar to 120 us dollar in the future while in the same time period the Chinese currency may appreciate to 4 to 1 us dollar.

    This is because of China’s strong export performance. Wages are increasing in China but exports are becoming higher value.

    India has a poor export performance with the exception of services in IT and business process outsourcing. Wages are increasing very fast in these sectors but so is the value of service exports. From low level IT customer service work, Indian IT companies are moving into IT consulting.

    However, all of IT and BPO in India employs just 3 million workers. This includes even the low level work. With wage increases in the double digits, I think the size of this industry is limited in terms of number of employees but it still has much potential in the complexity of work it can obtain.

    Chinese factories employ 120 million workers. Chinese factories have boosted productivity and are maintaining position in low level areas like textiles but also moving into higher value industries like big bulldozers (e.g. long ago Caterpillar lost its top place in construction exports to Russia to Chinese competition)

    The smart fraction in India could one day demolish Booz Allen from Bangalore but its service sector employs only 1/40th of China’s manufacturing sector.

    Gives you a sense of the magnitude of under performance in India. Can such a small smart fraction pull it off?

  15. There is no shine in India. Let’s revisit in 100 years. One thing that may help is a wider Christianization. The Northeastern states + Kerala have literacy rates in the 90%+ range thanks to missionaries. The Hindu heartland is as backward as backward can be.

  16. India is not one entity but made of multiple isolated sub systems . The Hindu God of 30,000 has its parallel in the composition of the society . But the elite control the worship of the gods ( Only Brahmin can officitae any religious ritual) and elite control the rest of the population whose IQ possibly range form 80 to 81 .The elite control the resources ,politics,and the narrative . West sees the elite and mixes it up (intentionally ) with the potential of the entire population .
    Western recognition of Indian achievment is often used by the elite to consolidate existing psychological power and gain more over . So one Ambani or a Brtish Hinduja , a few hotel owner or some succeeful celebrties like Sanjoy Gupta or new Surgeon General are brandished as evidences of “India shining” across the media .The purpose of this claim is not to motivate the population but to exert morte control ,exploit more ,and keep them in awe of the elite . Often this segment is allowed to vent thier frustration through killing of the religious minorities .
    India is a country where the rich upper class with connections through tribal family values and DNA basically use the rest of the population .The rest are conditioned to accept this dispensation as something to be proud of !

  17. http://www.telegraph.co.uk/news/uknews/immigration/11409181/British-Muslims-integration-and-segregation-are-about-economics-not-values.html

    Here is recent data from the UK Indian diaspora

    The UK Indian diaspora is a non-selected diaspora, more of a mid-grade-blend

    Many of them were Punjabis ( Pakistani Muslim and Sikh peasants ) imported in 1950 to fill in labor shortages

    Many were Gujurati, formerly railroad building coolies from Uganda – Patel peasants from Gujurat, mid-range IQ

    Some of the Hindus are Sri Lankan tamil dravidian refugees

    Less than 10% of UK Indian diaspora is elite – brahmin-merchant
    by comparison , 40% of USA Indian diaspora is elite, brahmin-merchant

    Overall UK with college degree = 27%
    Overall Muslim with college degree = 24%
    Sikhs with college degree = 30%
    Hindu with college degree = 44%

    In UK, Hindus are heading to be a socio-economically dominant elite, despite not having too many elite castes –

    Sikhs are mid-range in Indian IQ, there is a whole genre of dumb-sikh jokes and they have slightly exceeded whites

  18. “Many were Gujurati, formerly railroad building coolies from Uganda – Patel peasants from Gujurat, mid-range IQ”

    I can’t evaluate every statement made by the poster but I can tell you this one is a big distortion.

    Thousands of Indian laborers and also clerks were brought over to East Africa to build the Nairobi railway. Most left after the project was completed. By that time merchants from India arrived following the laborers and clerks. These merchants stayed and grew in number as new waves of merchants continuously went to India.

    In fact of all the mega rich Indian descended families in East Africa, all trace back their heritage to merchants who arrived 4-5 generations ago in Africa.

    So calling the population in Uganda the descendants of railway coolies is a gross distortion.

  19. There are-were Gujrati merchants in Uganda, many of them were Ismaili muslims,
    The bulk of the gujrati pop in UK, Uganda, east Africa, is-was Patels ( peasants from Gujurat )
    They also run most motels in USA
    Patels are very rich in the USA, too, despite being of peasant stock and not too bright

  20. thinkingabout it says

    The British Indian diaspora is definitely not as upper-caste dominated as the Indian community in the United States. And yet, they’re still fairly well-to-do, by no means a gangster culture or an insular chinatown sort of community.

    Even in the US, the Patel caste, which is probably the most widespread, is not an upper caste. Its members were mostly powerful landholders, but technically mid-to-low-level in the caste hierarchy.
    If the Patels in the US can do so well and produce so many doctors and what not, it gives me some reason to be optimistic for the rest of India as well.

    The actual upper caste Indians in the US are mostly first-generation workers in Silicon Valley and research universities. Their migrations were more recent than that of the Patels, so the impact made by their offspring is yet to be seen in large numbers.

    I think much of Indian achievement, especially in the diaspora comes from a culture of keeping your head down and focusing on academics – not so much from innate IQ.

  21. China is quickly catching up with Eastern European/Balkan countries in terms of Human Development Index. China already has a higher Human Development Index than Albania for example.

    Meanwhile India’s Human Development Index is still closer to that of Sub Saharan African countries than it is to Eastern European/Balkan countries.

    China has definitely seen way more improvement than India when it comes to increasing the standard of living for it’s people.

    China could one day experience the same miracle that South Korea did, a country which went from being dirt poor to 1st world.

  22. http://www.bbc.com/news/blogs-magazine-monitor-31557192

    Why homeless Britons are turning to the Sikh community for food

    After the 2008 recession many Sikh temples reported a surge in the numbers of non-Sikhs coming in for the free Langar meals. It’s now common to see non-Sikhs inside the temple

  23. China is quickly catching up with Eastern European/Balkan countries in terms of Human Development Index. China already has a higher Human Development Index than Albania for example.

    It’s a nonsensical grouping to compare to. In HDI terms, “Balkan” countries range from 29th to 95th, “Eastern European” ones from 25th to 114th.

    Too lazy to check the SSA countries too.

  24. Vanya Shivshankar, a Gowda, peasant landlord , mid-level ranking caste, just won USA child genius $100k prize on tv, handily beating 1 white and 2 oriental competitors with a huge margin, in the finals

  25. Does China’s economy follow the cycle of sunspots?

  26. Jefferson says

    “It’s a nonsensical grouping to compare to”

    The Human Development Index is not nonsensical at all. It does a pretty accurate job of assessing which countries are are advanced and which countries are backwards. You know India is a backwards country when indoor plumbing is considered a luxury there where in countries that have a higher Human Development Index everybody takes indoor plumbing for granted.

  27. Most of those people who don’t have indoor plumbing happen to possess cell phones. It’s not about luxury but about misplaced priorities and lack of awareness of hygiene (perhaps a different measure of backwardness.)

  28. Cellphones are dirt cheap (pardon the pun) while indoor plumbing requires a lot more investment at all levels – from the individual to the local community to the state, with no visible benefit. Using the commons as a toilet on the other hand is ‘free’.

  29. Anonymous says

    India is nothing but a sort of Brazil/ Mexico formed by the mixing of various races mostly Australoids and Whites (with some East Asian/ Semitic thrown in). Just like how Spaniards/ Portuguese (along with a few other Europeans serving in the Portuguese/ Spanish armies as well as settlers) mixed with native Americans and Blacks to create the colourful Hispanic race, in India replace Native Americans/ Blacks with Australoids and Spaniards with Eastern European ancestors (Aryans from Central Asia) and you have Indians. Thus you see a massive variation in IQ. India has always been a land of excessive variation in IQ and wealth. You had some of the richest people in the world (merchants/ rajas/ sultans/ governers) living among some of the most poorest destitute people in the world (the common folks). This has ALWAYS been the case, be it in Hindu-Buddhist times, during Mughal-Islamic times, during the British Empire (there were super rich Indians like Marwari/ Gujrathi industrialists and Maharajas in British India) and post Independence India/ pakistan/Bangladesh. This is how India has always been and will always be.
    Similarly with IQ. You had Indians writing high philosophy, discussing huge numerical problems while the majority lived in superstion and ignorance. Maybe Buddhism/ Christianity will reduce this inherent Brazil style inequality upto some extent but unfortunately most people of the Subcontinent are Hindu-Muslims.
    Indian settled places like Mauritus or Trinidad (thanks to oil) have done well upto some extent but pale in comparison to Chinese outposts like Singapore and Taiwan.
    The fact of the matter is that Northern Europeans and North East Asian always tend to build the best societies provided they do not go for some stupid ideology like communism (N. Korea). We Indians are skrewed by our genetics.

  30. Nigel,

    I disagree, since the Indian community in the US is the very wealthiest group of all. Wealthier than Chinese, Jews, Anglo-Saxons, or anyone else.


    While it is common for skeptics to insist that these are the ‘cream of the crop’ Indians, that is not entirely the case :

    1) Why would the Indians be any more ‘cream of the crop’ than Chinese or Filipino immigrants?
    2) The wealthiest Indians in the US are not the doctors or software engineers, but the owners of motel and gas station chains. These are very lucrative once you own 4-5 or more of them.
    3) Indian success seems to be continuing into their 2nd and 3rd generation. Hence, this success has gone on for too long, over too large of a community, to attribute to only the top 1% of Indians coming to America.
    4) Wealthy people in India don’t come to America. They have it made. It is specifically people who are either a) educated but poor, or b) families who want to all join up into a chain of business ownership that come to the US. Hence, this also proves that the elite of India don’t come here.

  31. South Asia is 1.7 Billion people.

    Even if only 10% of those have IQs of 100, that is still 170 million people.

    In America, there are 200M white people, of which half have IQs over 100. So 100M.

    So despite the low percentage, there are still 170M South Asians with IQs above 100, vs. 100M white Americans.

    Plus, the white vs. Australoid point is not complete, since by that metric, the much whiter Afghanistan and Pakistan would be more prosperous than Sri Lanka. In reality, the opposite is true – Sri Lanka is far more prosperous than Pakistan or Afghanistan, so greater Euro-whiteness has not led to prosperity. Perhaps Islam is a bigger negative than whiteness is a positive, but reducing everything to genetics/IQ is bound to lead to massive errors.

  32. India’s per capita GDP, while very low, is about the same as what….

    South Korea was in 1986
    Poland was in 1991
    Russia was in 2000
    Ukraine was in 2006

    So being 29 years behind S. Korea, 24 years behind Poland, 15 years behind Russia, and 9 years behind Ukraine (that too assuming India grows only at the same rate as those countries between then and now, when indeed India is growing faster), is hardly evidence of genetic inferiority.

    The genetics/IQ argument has its place, but people beclown themselves when they use this while forgetting about how quickly compound annual growth rates can compound up.

  33. Jews don’t appear as an ethnic or ancestry group in US Census documents.

  34. Even so, Indians in the US have outperformed even Jews, as per The Economist :


    “On the usual measures of success they outstrip all other minorities, including Jewish-Americans.”

    The fact that Indians in the US have outstripped every other group puts a lot of HBD assumptions to shame (in fact, South Indians are more represented in knowledge-based fields than North Indians. And Pakistanis and Afghans are whiter still.).

  35. A few facts to counter the pessimism of this article:

    1. The Indian population is fairly pacific, with violent murder rates quite low for India’s GDP and religious/ethnic diversity (in fact absolutely low, particularly in the South). South Indian small towns hardly have any police presence, yet crime rates are low.
    2. Indians have kept democracy going, a feat that much higher IQ Russians (for example) haven’t managed yet. It takes a certain maturity to hold onto democracy and that doesn’t fit a very low IQ profile. In fact, Modi’s election demonstrates a surprising maturity of the Indian electorate.

    3. Indian cities are dirty, Indian hygiene practices are primitive, yet, even in a dirty slum, you generally see families intact and kids could see that they can escape the slum if they study hard. That again reflects maturity that doesn’t fit the very low IQ profile.

    4. The IT sector in the US now has a substantial percentage of Indian, particularly South Indian, programmers, most of whom come from intermediate and low castes. The companies hiring them would presumably prefer to hire American minorities if at all possible. By and large, the Indians perform well and the hiring companies like them.

    Now, why are the published low IQ figures low? Education levels in India are shockingly uneven, because of extreme poverty. That makes IQ of the poor truly untestable.

    I would invite the smart reader to consider all the facts.

  36. SouthIndian,

    Most of the people reading this don’t care about the facts, despite Anatoly Karlin making a genuine effort to be fair. They want to reduce everything to IQ, which itself does not account for annual economic growth (why does the economy of any country grow at all if IQ is the sole determinant of prosperity? If the economy of a country grew at 3%, 5%, or 7% over last year, did the IQ of the nation rise?).

    They take the fact that African blacks have created chaos and violence everywhere they exist, and extrapolate that to all non-white races. While it is true that blacks have created dysfunction everywhere, whites are only sometimes prosperous, not always. Countries like Ukraine and Moldova are just as poor as Sri Lanka and India. And China was poorer than sub-Saharan Africa until the 1980s..

    By and large, the Indians perform well and the hiring companies like them.

    Not only are the CEOs of Microsoft, Motorola, and how Google Indians, but they are immigrant Indians, all ascending to the post before the age of 45.

    Sure, anecodotes are not averages, but the notion that IQ is everything is bizarre. Not to mention the fact that while men and women have the same average IQ, almost all innovation is done by men.