India limped, China raced on economic opportunities amid COVID: Report

India not only failed to capitalise on the economic opportunities thrown up by the COVID-19 pandemic, it also lost to China in making strategic moves, according to the Asia Power Index for 2020 released by Lowy Institute. 

The pandemic has hurt India’s growth as a regional power and, going ahead, it will have to confront developmental problems as COVID pushes more people into poverty, the institute said.  India’s output by 2030 will only be 40% of China’s, lower than the 50% that was estimated last year, the institute, which is based in Sydney, Australia, said.

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The pandemic has “certainly delayed India’s arrival as the great power in the region”, according to Herve Lemahieu, the director of Asian Power and Diplomacy Program of the institute who led the study. “It also means India will be quite distracted by the development challenges and by the new poverty rate, with more newly impoverished people in South Asia,” he said, reported Bloomberg.

India stands fourth in the Index that ranks 26 nations and territories in Asia Pacific on the basis of influence they wield in the region by taking into account parameters such  as economy, defence spending, internal stability, and future resources. US still wields the most influence in the region, closely followed by China, with Japan coming third.

According to the institute, China is fast catching up with the US, whose reputation has taken a beating due to the way it has handled COVID. US faces serious challenge from China to its status as the top superpower in Asia Pacific. In fact, the US’s lead over China has halved from the 10 points advantage it had two years ago. Trump’s handling of COVID, trade wars with China, and decision to walk out of many treaties has hurt the “prestige” of the US, it said

Calling COVID a “game changer”, Lemahieu said the US’ economy is unlikely to recover before 2024 from the economic crisis caused by the pandemic. China, however, has already rebounded, lending it a big advantage over neighbours, including India, in the coming decade, he said.

Lemahieu said it is quite possible that China will overtake the US by the end of the new decade. However, the lead may not be “meaningfully enough to pull ahead by substantial margins”, he said, reported Bloomberg.

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According to the study, Asia’s economy was on course to becoming larger than all the regions in the rest of the world put together in 2020. However, it now has to face “a perfect storm of public health, economic and strategic challenges” in the aftermath of COVID.