India to inch closer to China in growth rate: World Bank

[Abingdonboy]

Agreed that External factors were there but not that big as they were in 2008-09, even than we managed to clock close to 7% growth rate, but now we have a projection of dismal (w.r.t. Indian economy) 5.3% this can be attributed to policy paralysis of UPA-2 even when Congress was in much stronger position than in UPA-1 (when Left parties were it's ally). Budget deficit has grown to more than 6% of GDP & they are bringing more & more social sector schemes in the shape of Food Guarantee scheme (I mean where is the money for it ).

As for year 2013 is concerned, i don't have much enthusiasm since the GOI will soon turn into ELECTION MODE.

+ Again, being a big economy is no reason for low growth as we have hardly averaged 4% over entire 65 years of Independence when China is growing at 10% for more than 3 decades now (we both started around the same time, but now China is entirely in a different league).

P.S. OMG, i m sounding so Pessimistic

I've read quite a bit of analysis on this and the fact is 2013 has to be a reformist year otherwise the Congress can kiss goodbye to re-election. Never before has economic performance been such an election issue. It is simple, the party who is seen by the people to be the most likely to bring about prosperity to the common man and India will be elected. Right now the Congress don't fit the bill and with the main reformer (MMS) taking himself out of the running in 2014, 2013 has to be a strong economically positive year. The GoI willdo it to just save their own backsides.

 

[Contrarian]

China-bashing already started in the first page.

Mate, its not always bashing. Analyzing flaws is not always bashing. Like there are umpteen flaws with India's planning - talking about them is not bashing.

More info regarding the corridor would be nice.
And what does Japan gain from helping India's manufacturing sector? Wouldn't they be more concerned about improving their own sector even more?

And honestly, India has enough tech now, locally developed or imported, to do this herself. 100% Made in India.

They are. Manufacturing in Japan is not feasible to compete in other countries. Most Japanese companies manufacture in China. In fact they were the first ones who started manufacturing in China, the rest of the world followed.

Japan however is now wary of China. A spat can turn ugly any time - and the billions of dollars of Japanese companies invested in China will goto waste. Japanese companies are also seeing the flip side of having all their manufacturing done in China.

This coupled with rising wages in China coupled with currency appreciation of Yuan.

Japanese have started to find alternative markets to move a major chunk of their manufacturing.

India, Vietnam, Laos, Cambodia, Thailand - are the major competitors in trying to bag all these manufacturing jobs moving out of China.

Infact Japan has planned this international corridor of Japanese companies - moving from Pacific cost to Indian Ocean crossing Vietnam, Thailand, India.

 

[Shardul.....the lion]

the Main reasons of deficit

1. Import of Petroleum products
2. Import of Gold
3. Extensive subsidies

At least earlier petrol and today diesel is partially deregulated that will help long way to reduce deficit.

regarding gold, Indian public will keep buying even if its 100000 for 10 gms. so it will go on increasing as India prospers.

 

[RazorMC]

... They are. Manufacturing in Japan is not feasible to compete in other countries. Most Japanese companies manufacture in China. In fact they were the first ones who started manufacturing in China, the rest of the world followed.

Japan however is now wary of China. A spat can turn ugly any time - and the billions of dollars of Japanese companies invested in China will goto waste. Japanese companies are also seeing the flip side of having all their manufacturing done in China.

This coupled with rising wages in China coupled with currency appreciation of Yuan.

Japanese have started to find alternative markets to move a major chunk of their manufacturing.

India, Vietnam, Laos, Cambodia, Thailand - are the major competitors in trying to bag all these manufacturing jobs moving out of China.

Infact Japan has planned this international corridor of Japanese companies - moving from Pacific cost to Indian Ocean crossing Vietnam, Thailand, India.

Hmmm. A Japanese "string of pearls".
All aimed at countries who aren't best buds with China.

Another benefit for India is even more licensed productions, transfer of tech and the skills development for locals.

But the INR's current value compared to the other countries might be a disadvantage in the future when exports are considered. Lower currency also means lower production costs in most cases.

So the Japanese might help build the infrastructure through loans and other know-how, but the Japanese companies may not be too eager to pay so much compared to China or Vietnam.

 

[R0H1T]

Hmmm. A Japanese "string of pearls".
All aimed at countries who aren't best buds with China.

Another benefit for India is even more licensed productions, transfer of tech and the skills development for locals.

But the INR's current value compared to the other countries might be a disadvantage in the future when exports are considered. Lower currency also means lower production costs in most cases.

So the Japanese might help build the infrastructure through loans and other know-how, but the Japanese companies may not be too eager to pay so much compared to China or Vietnam.

You do realize there's a massive self contradiction there right

 

[illusion8]

Hmmm. A Japanese "string of pearls".
All aimed at countries who aren't best buds with China.

Another benefit for India is even more licensed productions, transfer of tech and the skills development for locals.

But the INR's current value compared to the other countries might be a disadvantage in the future when exports are considered. Lower currency also means lower production costs in most cases.

So the Japanese might help build the infrastructure through loans and other know-how, but the Japanese companies may not be too eager to pay so much compared to China or Vietnam.

Most Japanese corporations already are present in India - what it will do is it might increase investments in those companies and it's just a might - there are other low cost destinations other than India, India is not that low cost when it comes to manufacturing compared to China and I mean that in a negative way because we need a much bigger manufacturing base to employ our population.

 

[Killswitch]

If the Pakistani military and ISI can step back and think long term, allot of the growth in India can benefit Pakistan. Right now trade between both countries is very low and could easily explode if barriers and old attitudes were removed from the equation. I would like to see the whole region, not just India experience major growth.

 

[IND151]

Double digit growth is always a dream of every growing economy. But it would be better to have a long sustained single digit growth ( around 8-9). It keeps the momentum going for long time.

BTW CD Spydee said " The bigger they are harder they fall "
Sorry couldnt resist to troll

Indian achieved this since 2000 to 2010. (6 to 7% average)

Hope we achieve it again

 

[Contrarian]

Hmmm. A Japanese "string of pearls".
All aimed at countries who aren't best buds with China.

Another benefit for India is even more licensed productions, transfer of tech and the skills development for locals.

But the INR's current value compared to the other countries might be a disadvantage in the future when exports are considered. Lower currency also means lower production costs in most cases.

So the Japanese might help build the infrastructure through loans and other know-how, but the Japanese companies may not be too eager to pay so much compared to China or Vietnam.

Not exactly. Indonesia and Pakistan are also trying to woo Japanese companies to setup manufacturing bases in their countries, but for different reasons they are not successful. The best candidates - discounting the fact that most of the countries who are running for these dont share the best relationship with China - are still the same ones who i mentioned in the last post. Thailand and Myanmar have very good relations with China.

But India, Vietnam are very competitive. Many companies already have manufacturing base or at least a research center in India - so India is a natural choice in this case. Size of India automatically brings a lot of advantages.

INR being very low vis-a-vis the dollar also bolsters its case. The problem in India has always been infrastructure - so the Japanese are financing probably the biggest infrastructure project in independent India - the $90 billion Delhi-Mumbai Industrial Corridor. This Corridor is mainly for catering to manufacturing.

Even if Japanese companies themselves dont move in at the level expected, this DMIC alone is expected to transform India to an attractive place such that other Western companies start manufacturing here.

 

[RazorMC]

Not exactly. Indonesia and Pakistan are also trying to woo Japanese companies to setup manufacturing bases in their countries, but for different reasons they are not successful ...

We don't have the energy to supply our current needs, let alone giant manufacturing plants. Our politicians are only aiming to transfer their black money out of Pakistan under the guise of payments etc.

But India, Vietnam are very competitive. Many companies already have manufacturing base or at least a research center in India - so India is a natural choice in this case. Size of India automatically brings a lot of advantages.

INR being very low vis-a-vis the dollar also bolsters its case. The problem in India has always been infrastructure - so the Japanese are financing probably the biggest infrastructure project in independent India - the $90 billion Delhi-Mumbai Industrial Corridor. This Corridor is mainly for catering to manufacturing ...

Agree on the research part. India is perhaps the best region for tech development outside the US and China. You should thank MMS for this status though. He got you the money in the first place.

Currency is another matter. India does not have a clear advantage here. The Dong is even lower than INR. But I'm guessing that there are two choices here:

1. India's better infrastructure, better educated workforce and preference for entrepreneurship
or
2. Vietnam's slave-labour wages that cut down on production costs

So it depends on the type of investment people are willing to make. Plain old factories where average goods are produced are going to choose Vietnam.
Businesses that want to develop a regional presence and ensure long-term growth will look towards India.

 

[Contrarian]

India is also making its case in a hard to notice manner - India is trying dead hard for a regional FTA. Already signed deals with BD, process on with Pakistan, etc for free trade.

Now free trade would mean that almost all the heavy manufacturing of products for the entire South Asia would happen in India. This fact is not lost on Japanese companies or the others - who look to invest at a new base.