|
Expressing optimism on Indian economy over that of China, Stephen S Roach, chairman of Morgan Stanley Asia said that India has made tremendous improvement in the recent years on the macro developments, especially with an increase in foreign direct investments, higher savings and improvement in infrastructure in the share of India in GDP.
In a press conference Roach said, “These improvements reinforce the long-standing accomplishments of India on the micro front—large collection of world-class competitive companies, well educated IT competent workforce, extraordinary entrepreneurs and innovators, well developed capital market, solid financial institutions, rule of law and democracy.” He also pointed out what has been missing in this whole interplay between the micro and now the improved macro has been the political impetus to reforms.
According to Roach, “India is a more balanced economy than the rest of export-led Asia,” In fact, for the first time, he is now more optimistic about prospects for India than China. “China faces major challenges for the first time in 30 years,” Roach said. “It pushed its export-led model too far, leaving it too dependent on the external climate.”
Roach expects the new Congress-led government to more effectively push and take further the reforms on various fronts and also hops that it will be much less hobbled by the politics of coalition management.
Regarding the growth forecast for the Indian economy, Roach said the growth would remain between 5.5-6.5% for now.
On May 28, Morgan Stanley raised the growth forecast to 5.8% in the fiscal year to March 31, 2010 as against the initial prediction of 4.4%. According to Roach, the growth rate of economy might just come like a surprise in the whole of Asia.
He said, “The growth in the Indian economy cannot go beyond 8% in another 2-3 years time.”
Roach also added that for India to reduce its fiscal deficit needs to resort to disinvestment. The fiscal deficit of India widened to a seven-year high of 6.2% in the fiscal to March 31 as government borrowed more to fund fiscal stimulus packages. The Financial Express
June 4, 2009
|
