Why compare: groupings and common starting points

Detail

1. Why nations form groupings

Globalisation pushes countries to become stronger at home

• Globalisation means the world's economies becoming more closely linked through trade, investment, technology and the movement of people.
• It has short-term effects, such as sudden price changes or loss of jobs in some industries. It also has long-term effects, such as changes in what a country produces and exports.
• So every nation tries to strengthen its domestic economy (the economy inside its own borders).
• One way to do this is to join regional and global economic groupings.
• A regional economic grouping is a group of nearby countries that agree to cooperate on trade, investment and development. Examples are SAARC and ASEAN.
• A global grouping brings together countries from different continents. Examples are the G-20 and BRICS.

Developing countries compete on two fronts

• They compete with rich (developed) nations.
• They also compete with one another for the "relatively limited economic space" that the developing world has in world markets.
• This means there are only so many export orders, foreign investors and markets to go around.
• So if one developing country sells more textiles or attracts more factories, another may lose them.

Neighbours share an environment

• Rivers, air, monsoons and borders cross national lines.
• So economic activity in one country, such as dams, pollution or deforestation, affects human development in its neighbours as well.
• Human development means improving people's lives through health, education and income, not only through GDP.

The payoff of comparison

• When a country studies how its neighbours developed, it learns its own strengths and weaknesses.
• This is why NCERT compares India with China and Pakistan.

2. The groupings NCERT names

SAARC (South Asian Association for Regional Cooperation)

• Founded: 8 December 1985, when the SAARC Charter was adopted in Dhaka, Bangladesh [2].
• 8 members: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka [2].

• Afghanistan was the last to join, in 2007. It was not a founder member.

• Secretariat: Kathmandu, Nepal. The Secretary-General is Md. Golam Sarwar of Bangladesh (as of June 2026) [2].

• A secretariat is the permanent office that runs the day-to-day work of an organisation.

• Aim: to raise the welfare of South Asians and speed up economic growth through "collective self-reliance" (member countries depending on each other rather than on outside powers) [2].

• Scale (as of June 2026): about 1.9 billion people, or roughly 24% of the world's population, with a combined GDP of about US$ 5 trillion [2].

SAARC's trade framework has three layers [2]:

• SAPTA (SAARC Preferential Trading Arrangement): members cut tariffs only on a chosen list of goods.

• A tariff is a tax on imported goods.

• SAFTA (South Asian Free Trade Area): in force since 2006. It aims to bring tariffs on most goods traded between members down towards zero.

• A free trade area (FTA) is a group of countries that remove tariffs on trade among themselves. Each member still keeps its own tariffs on goods from outside countries.

• SATIS (SAARC Agreement on Trade in Services): covers trade in services such as IT, banking and tourism.

Weak results

• Intra-regional trade (trade among SAARC members, as a share of their total trade) is less than 6% (MEA, June 2026). MEA blames problems in putting the agreements into practice [2].
• Worked example: how to calculate the intra-regional trade share
• Formula: Intra-regional trade share = (Trade among members ÷ Total trade of members with the whole world) × 100
• Suppose SAARC members trade US$ 1,000 billion in total with the world, and only US$ 55 billion of that is with each other.
• Share = (55 ÷ 1,000) × 100 = 5.5%. This is below 6%.
• For comparison, an intra-regional share above 20% is usually seen as a well-integrated region.

Summit freeze

• 18 summits have been held. The first was in Dhaka in 1985 [2].
• The last (18th) summit was held in Kathmandu on 26–27 November 2014. Its theme was "Deeper Integration for Peace and Prosperity" [2].
• The 19th summit, which Pakistan was to host in 2016 (Islamabad), never took place. MEA gives two reasons: members could not agree, and there were concerns about cross-border terrorism [2].
• The last formal Council of Ministers (foreign ministers) meeting was held in Pokhara, Nepal, in March 2016. SAARC work now happens only through technical and official-level meetings. One example is the Programming Committee meeting in Kathmandu on 11–12 February 2026 [2].

Institutions to remember [2]

• South Asian University (SAU), New Delhi
• Its agreement was adopted at the 14th Summit, New Delhi, 2007. Classes began in 2010.

• India pays the full capital cost and 59% of the running budget.

• SAARC Development Fund (SDF): Thimphu.

• SAARC Energy Centre: Islamabad.
• SAARC Agriculture Centre: Dhaka.
• SARSO (South Asian Regional Standards Organisation): Dhaka.

ASEAN (Association of Southeast Asian Nations)

• Founded: 1967 by the Bangkok Declaration. Secretariat: Jakarta.
• It had 10 members until 2025. Timor-Leste became the 11th member on 27 October 2025 [3].
• India is not a member. India is a dialogue partner, which means it holds regular talks and cooperates with ASEAN but does not belong to it.

EU (European Union)

• Founded: 1993 by the Maastricht Treaty.
• It has 27 members since the UK left (Brexit, 2020).
• It is the deepest grouping NCERT names. It has a single market, and most members share a common currency, the euro.

G-8 → G7 (NCERT outdated)

• NCERT calls it the G-8. It became the G7 again after Russia was suspended in 2014.
• Members: USA, UK, France, Germany, Italy, Canada and Japan. The EU also takes part.

G-20

• It began in 1999 as a meeting of finance ministers and central bank governors. Leaders' summits started in 2008, during the global financial crisis.
• The African Union became a permanent member at the New Delhi summit in 2023, which India hosted.

BRICS

• It began as BRIC in 2009 (Brazil, Russia, India, China). South Africa joined in 2010, which added the "S".
• Expansion:
• 2024: Egypt, Ethiopia, Iran and the UAE joined.
• 2025: Indonesia joined.

• Saudi Arabia's status is still unclear (verify current).

• New Development Bank (NDB): headquarters in Shanghai. It lends money for infrastructure and sustainable development in member countries and other developing nations.

• India holds the BRICS Chairship in 2026. It is India's fourth time as chair, starting 1 January 2026. Under it, ministerial meetings have been held, such as the 10th BRICS Industry Ministers' Meeting and the 16th BRICS Trade Ministers' Meeting, both in Jaipur [4][5].

3. Common starting points (8.2)

Same start in time

• India and Pakistan: independent in 1947.
• People's Republic of China (PRC): founded in 1949.
• Nehru said these changes "symbolise the new spirit of Asia and new vitality" in Asia.

All three chose planned development

• A Five Year Plan (FYP) is a government document that sets targets for five years. It covers investment, output, and social goals such as schools and hospitals, and decides how resources are shared among sectors.

Country	First plan	Latest status
India	First FYP, 1951-56	Plans ended in March 2017. The 12th Plan (2012-17) was the last
China	First FYP, 1953	15th FYP covers 2026-30 [6][7] (NCERT: 14th FYP, 2021-25)
Pakistan	First FYP, 1956 (now called the Medium Term Development Plan)	National plan Uraan Pakistan, 2024-29 (verify current) (NCERT: 12th FYP, 2018-23)

China's 15th FYP (2026-30): what has changed

• Its main aim is to make domestic demand, especially household consumption, the main driver of growth [6][7].
• Until now, China grew mainly through investment (factories, roads, housing) and exports.

• Now it wants its own people to spend more.

• Its other priorities are better jobs, stronger social protection for a fast-ageing population, and climate goals [7]:

• carbon emissions to peak before 2030
• carbon neutrality by 2060

• a new "dual control" of carbon intensity and total carbon emissions

• Carbon intensity means the carbon dioxide released per unit of GDP.

India: from Planning Commission to NITI Aayog

• Planning Commission: set up in March 1950 by a Government of India resolution, with the Prime Minister as Chairperson [8].

• It was created by an executive resolution, so it was neither constitutional nor statutory. This is a common exam trap.

• NITI Aayog (National Institution for Transforming India) replaced it. It was set up by a Union Cabinet resolution dated 1 January 2015 [8][9].

• NITI Aayog is a think tank. It gives strategic and policy advice.

• Unlike the Planning Commission, it does not allocate funds to states.

• Five Year Plans ended in March 2017.

Similar strategies in India and Pakistan

• Both built a large public sector. The public sector means businesses owned and run by the government, such as steel plants, railways and banks.
• Both raised public spending on social development such as education and health.

Same level until the 1980s

• All three countries had similar growth rates and per capita incomes until about 1980.
• Growth rate of GDP = [(GDP this year − GDP last year) ÷ GDP last year] × 100
• Example: GDP rises from ₹100 lakh crore to ₹106 lakh crore.

• Growth = (6 ÷ 100) × 100 = 6%.

• Per capita income = National income ÷ Population

• Example: national income is ₹200 lakh crore and population is 140 crore.

• Per capita income = 200,00,000 crore ÷ 140 crore ≈ ₹1.43 lakh per person per year.

• Because the three started from similar levels, the gaps that opened later can be traced to policy choices. This makes the comparison useful.

4. Different political systems

India

• The world's largest democracy.
• Its Constitution is secular (the state treats all religions equally) and liberal (it protects individual rights).

Pakistan

• A militarist political power structure. The army has repeatedly ruled directly or controlled policy from behind the scenes.

China

• A one-party command economy.
• In a command economy, the state decides what to produce, how much to produce, and at what price. Markets do not decide these things.
• NCERT outdated: NCERT says China "has only recently started moving towards a democratic system". This has not happened.
• China's liberalisation since 1978 was economic, not political.
• The Communist Party of China still holds sole power.

Prelims Hooks

• SAARC was set up on 8 December 1985 in Dhaka. Its Secretariat is in Kathmandu. It has 8 members, and Afghanistan was the last to join.
• The last SAARC summit was the 18th, in Kathmandu in November 2014. The 19th (Islamabad, 2016) was never held.
• SAARC's trade pacts come in this order: SAPTA → SAFTA (in force since 2006) → SATIS (services). Intra-SAARC trade is below 6% (MEA, June 2026).
• South Asian University is in New Delhi. The SAARC Development Fund is in Thimphu. Trap: these are not in Kathmandu.
• Timor-Leste became ASEAN's 11th member in October 2025. India is only a dialogue partner, not a member.
• Trap: the G-8 is now the G7, because Russia was suspended in 2014. The African Union joined the G-20 at the New Delhi summit, 2023.
• The BRICS New Development Bank has its headquarters in Shanghai. India holds the BRICS Chairship in 2026, its fourth time.
• First plans: India 1951, China 1953, Pakistan 1956. China's 15th FYP covers 2026-30.
• The Planning Commission (March 1950) and NITI Aayog (1 January 2015) were both created by executive/Cabinet resolutions. Neither is constitutional or statutory.

Mains Points

• Why regionalism in South Asia has underperformed
• SAARC covers about 24% of humanity, yet trade among its members is below 6%.
• Politics, especially the India–Pakistan dispute and cross-border terrorism, has held back economics. There has been no summit since 2014.

• So India has shifted towards sub-regional and cross-regional platforms: BIMSTEC, BBIN, Act East with ASEAN, and BRICS/G-20 leadership.

• Same start, different results

• All three were at similar income levels until about 1980, so later gaps can be traced to policy choices.
• Examples: China's early land reform and 1978 reforms, India's 1991 reforms, and Pakistan's political instability and dependence on aid.

• This is a strong opening for any GS-III answer on development strategy.

• Planning has changed shape

• China still uses Five Year Plans. Its 15th FYP (2026-30) now targets consumption, social protection and carbon peaking.
• India dropped plans in 2017 for NITI Aayog's advisory, cooperative-federalism model.

• This shows a shift from command planning to indicative, strategy-based planning. In indicative planning, the state sets goals and guides the economy but does not order what to produce.

• Political system and growth

• China's one-party system made fast, top-down decisions possible, but at the cost of freedoms.
• India's democracy is slower, but it offers legitimacy and ways to correct mistakes.
• Pakistan's military-dominated system shows that neither democracy nor growth is guaranteed without stable institutions. This is useful for GS-II/GS-III debates on democracy and development.