Sunday, October 3, 2010

Will India really outpace China?

Double-digit GDP growth may still be an elusive goal for India, but already analysts are predicting that the country will be growing faster than China - the champion of sustained double-digit growth in the past two decades - in a matter of few years. An article in The Economist states:


India’s GDP is expected to grow by 8.5% this year, and could grow even faster. Chetan Ahya and Tanvee Gupta of Morgan Stanley, an investment bank, predict that India’s growth will start to outpace China’s within three to five years. China will rumble along at 8% rather than double digits; India will rack up successive years of 9-10%. For the next 20-25 years, India will grow faster than any other large country, they expect. Other long-range forecasters paint a similar picture.


Among the advantages listed by The Economist in India's favour is its demography, with a strong surge expected in the percentage of the working age population in the coming years. The other is that India's growth has been fuelled primarily by the private sector and its entrepreneurs, while China's has been more state-driven.


If India keeps growing as fast as it is now, it will change the world. Optimists predict that it will be the next China, only friendlier and more democratic. Pessimists retort that such forecasts are over-spiced. They point out that India has a lot of catching up to do. China’s economy is four times bigger, so that even if India starts to grow faster, it will not overtake China for a long, long time. And they add that Indian businesses face several bottlenecks on the uneven road to growth.


Among the bottlenecks are the inadequate infrastructure, the lack of skilled workers, and corruption. Another article in The Economist lists them down:


For now, India’s problems are painfully visible. The roads are atrocious. Public transport is a disgrace. Many of the country’s dynamic entrepreneurs waste hours each day stuck in traffic. Their firms are hobbled by the costs of building their own infrastructure: backup generators, water-treatment plants and fleets of buses to ferry staff to work. And India’s demographic dividend will not count for much if those new workers are unemployable.


....


Given the choice between doing business in China or India, most foreign investors would probably pick China. The market is bigger, the government easier to deal with, and if your supply chain for manufactured goods does not pass through China your shareholders will demand to know why. But as the global economy becomes more knowledge-intensive, India’s advantage will grow.

61 comments:

  1. Both countries have a lot of advantages and disadvantages as well. They are sure going to be the drivers of the world economy. But who can sustain the growth for the longer time is the question. India will find it very difficult to catch up with China for a long time. What shifts the verdict in our favour would be the political scenario. Will China be able to maintain its political stability for long given the criticisms world over?

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  2. Besides, I think we need the top-notch science, research and education system to dominate the world. It's not just the economic might, we also need intellectual might. That will eventually exponentially give us the economic might.

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  3. Moreover my opinion is that even with so much hurdles interms of Lacking Infrastructure,Red-Tapism,Corrpution,Bureaucracy,W/O Real Political Will & leadership,India has been able to achieve much.China's growth story is more of been supported by the People in Power i.e the Govt.Be it preparing Athletes for Olympics,raising & Building Domestic Telecom Giants like Huawei,ZTE...

    We can definitely beat them if Indian people could find an able leader solely concentrating to reach the Top.

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