India's economy may expand more than China in the next 10 years if the world is the second most populous nation lifts curb foreign investment in retail and increases spending on roads and bridges, Nouriel Roubini said.
"I am very optimistic about the future growth of India" because the economy is driven by domestic demand, while China relies more on exports, a professor at the University of New York and chairman of Roubini Global Economics, who predicted the crisis Global Financial said yesterday in New Delhi. "The challenge for India will be to sustain a growth of 9 percent while keeping inflation under control."
Roubini joins Morgan Stanley in predicting India will grow faster than China. The government of Prime Minister Manmohan Singh, is expected to double spending on roads, ports and power plants to $ 1 billion in the five years to 2017 to improve the quality of infrastructure in India, which falls under Sri Lanka and Ivory Coast devastated by war.
The country of South Asia's gross domestic product rose 8.9 percent for the second straight quarter in July-September, the government said this week. OP Bhatt, chairman of the State Bank of India, the largest in the country, said an increase of 10 percent for the nation "is inevitable."
Small shops
laws of India, designed to protect owners of small shops, limit foreign investment to a single brand retail operations and wholesale. rivals Wal-Mart Stores Inc., the world's largest retailer, and Carrefour SA and Tesco Plc and are pressing the government to allow foreign investment after the Ministry of Commerce invited the views of the industry in eliminating restriction.
Wal-Mart's chief executive, Michael Duke, said in October it is "optimistic" that the non-Indians be allowed to invest in the country. Organized retail can create as many as 3 million jobs over the next five years in India, according to Duke.
India's economy has resisted a slowdown of growth in neighboring Asian countries from Thailand to Malaysia, where the appreciation of the currency and export risks to the debt crisis in Europe and the U.S. unemployment have clouded the outlook.
production plant in India last month grew at the fastest pace in six months, according to the Purchasing Managers Index produced by HSBC Holdings Plc and Markit Economics. Domestic service industry expanded at the fastest pace in four months in November, the companies said in a statement. Exports in October rose 21.3 percent, a separate report showed.
Young people
"China is likely to slow in the coming years and the gradual growth of India is likely to accelerate, driven by a young population and increased consumption, Roubini said.
India increased from 136 million workers, more than the population of Japan, in 2020 compared with 23 million for China, Morgan Stanley economist Chetan Ahya said in August. That will help the country tap into a pool increased savings and help finance infrastructure projects, he said.
Morgan Stanley expects India to overtake China as the fastest growing economy in the world in 2015. India's growth may accelerate to 9.5 percent between 2011 and 2015, Ahya said.
India can sustain a growth rate of 9 percent for increasing productivity and addressing supply issues, Roubini said yesterday.
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