India will overtake China:MIT,Harvard

[STD]

India will overtake China: MIT, Harvard
The news is 5 years old! and the effects are already visible

WASHINGTON: In the long run, India will overtake China in economic growth owing to homegrown entrepreneurship, stronger infrastructure to support private enterprise and companies, which compete internationally with global firms, a media report has claimed.

The report, written by Yasheng Huang, Associate Professor at the Sloan School of Management at the Massachusetts Institute of Technology, and Tarun Khanna, a professor at Harvard Business School, said India was 'superior' in utilizing its resources, thus contributing to economic performance.


"The real issue is not where China and India are today but where they will be tomorrow. The answer will be determined in large measure by how well both countries utilize their resources, and on this score, India is doing a superior job," the duo said in the report published in FP - a magazine published by the Carnegie Endowment.

Differentiating between 'routes' to economic prosperity, they said that India's homegrown entrepreneurship gave it an advantage over China, where Foreign Direct Investment (FDI) largely fuels growth.

"What is the fastest route to economic development? Welcome FDI, says China, and most policy experts agree. But a comparison with long time laggard India suggests that FDI is not the only path to prosperity. Indeed, India's homegrown entrepreneurs may give it a long-term advantage over a China hamstrung by inefficient banks and capital markets," they argued.

They said the ubiquitous "Made in China" label on everything in a major department store from shoes to garments to toys and electronics obscured an important point: few of these products are made by indigenous Chinese companies.

"You would be hard-pressed to find a single homegrown Chinese firm that operates on a global scale and markets its own products abroad. That is because China's export-led manufacturing boom is largely a creation of FDI, which effectively serves as a substitute for domestic entrepreneurship," they said.

The duo stressed that India provided a more "nurturing environment" for domestic business, thus spawning a number of companies that now compete internationally with the best that Europe and the us have to offer.

"Many of these firms are in the most cutting-edge, knowledge-based industries -- software giants Infosys and Wipro and pharmaceutical and biotechnology powerhouses Ranbaxy and Dr. Reddy's Labs, to name just a few", Khanna and Huang said.

India has also developed much stronger infrastructure to support private enterprise. Its capital markets operate with greater efficiency and transparency than do China's. Its legal system, while not without substantial flaws, is considerably more advanced, the two argued.

Huang and Khanna also contrasted India's "increasingly building from the ground up" to China's pursuit of a "top-down approach" for economic growth, saying it reflected the political systems of both the countries. "India is a democracy and China is not."

"China and India have pursued radically different development strategies.

India is not outperforming China overall, but it is doing better in certain key areas. That success may enable it to catch up with and perhaps even overtake China," the two experts felt.

"It would not only " demonstrate the importance of homegrown entrepreneurship to long-term economic development; it will also show the limits of the FDI-dependent approach China is," the duo said.

 

[STD]

International Business Times:Aug 2010.



India's economic growth could match and surpass that of its fellow Asian giant China within two years.



Capital Economics Ltd. (CE) of London believes that India's second-quarter GDP, to be released on Tuesday, will be little changed in year-over-year terms from the first quarter, which will likely disappoint the market. However, any relapse in GDP growth in the second quarter is likely to be a pause rather than the start of a sustained downturn.

Overall, CE forecasts that Indian GDP growth will accelerate to 9.0-9.5 percent in fiscal 2011 (April-March), from 8.8 percent in fiscal 2010. The official and consensus forecasts call for growth in the 8.0-8.5 percent area.



Furthermore, CE holds that economic growth in India will remain above 9.0 percent annually beyond next year, while growth in its main Asian rival China should settle out at about 8.0 percent next year -- which means India could finally outperform China over the next two years.

Similarly, Morgan Stanley also asserts that Indian GDP will grow faster than China’s by as early as 2013, buoyed by improving demographics, structural reforms and globalization.

Morgan Stanley analysts Chetan Ahya and Tanvee Gupta wrote in the report that India’s economy will accelerate to a “sustainable” rate of 9 percent to 10 percent by 2013-2015, after an average of 7.3 percent over the past 10 years. Morgan also thinks China’s GDP growth will slow to 8 percent by 2015 from about 10 percent on average over the past 30 years, .

For the moment, India is rolling along nicely.

"The [economic] recovery was led initially by government spending, exports, and inventory-rebuilding, but is adjusting to being driven by household expenditure and business investment," CE said. "We have no doubts at all that private sector spending will take over. But in [the] second quarter the fade in the initial drivers of the [economic] upswing appears to have been faster than the pick-up elsewhere."

CE cites based on monthly data industrial output in India fell around 6 percent quarter-over-quarter in the second quarter, compared to the first quarter.
On the output side, CE noted, growth in the services sector probably eased as well given the fiscal consolidation program.

"The best performer in terms of the year-over-year change relative to [the] first quarter is likely to have been agriculture given the near-normal monsoon rains and increased crop production," the London-based research firm stated. "On the expenditure side, net foreign trade (exports
minus imports) will have been a drag given the probable increase in the current account deficit."

The contribution from government spending also likely slowed, while the increase in household spending was probably constrained by the acceleration in inflation.

"However, business investment, which surged in first quarter, likely stayed very strong given the continued rapid year-over-year gain in the production of capital goods," CE indicated.

Looking ahead in the near-term, CE expects that urban household incomes should climb rapidly while rural demand will be lifted by the more normal weather conditions.

"Bank lending has also accelerated and, with consumer debt burdens still relatively low, there is plenty of scope for household borrowing to grow," CE noted. Vehicle sales have been strong and should stay impressive in coming quarters."

In addition, CE cites that private sector investment should continue to grow at a rapid pace and that corporate profitability is high while the economic upswing is increasingly pushing against capacity constraints.

"The ongoing heavy expenditure on infrastructure improvement projects will also lower costs and open up new business opportunities for the private sector," CE added.

CE also said that inflation in India --which has been a concern -- has probably peaked and should slow further.

"High crop production will ease the pressure on food prices. Moreover, stronger investment should increasingly reduce supply-bottlenecks and capacity constraints, which should keep a lid on non-food inflation," CE stated.

Nonetheless, the Reserve Bank of India (RBI) still has a lot of work to do to ensure that inflation slows to its 6 percent target for March 2011.
"We expect that the two key policy rates will both be increased by 25 basis points at the next RBI review in mid-September and that rates will rise a cumulative 100-125 basis points over the next 12 months," CE concluded.

 

[Undivided Kashmir]

We will talk about it when the said thing happens, until then just chill.

 

[praveen007]

hai i think that 2 year time line is a bit over kill. yes we will surpass them but it might take about a 10-15 years

 

[somebozo]

Most of such articles are part of western propoganda warfare to inflate indian self esteem because the real threat of to west is Chinas rising economic superiority and only way to throw a spanner in is enanging China in a war, even a short one would have devasting effect on economy. None of the western country willing to engage China directly are propping up India to do their dirty job. Rising Indian racism, violence against minorties and human right abuses which are being ignored by champions of rights to line up some defence contracts are a sequel to this drama.

Its is upto Chinese on acting smart and throwing the spanner back into their mercinaries and rising above all differences. Failure of western strategy to tackle China will spell death for them as China is already enjoying more influence then American and Europeans combined in atleast 50% of the world.

 

[diva]

Lets work towards it to be better and till then shut our mouths jumping around that we will be better than you.

Dont forget that we come from a land where modesty has been given a big value. Even if we were better we are not supposed to jump around over it.

 

[STD]

Most of such articles are part of western propoganda warfare to inflate indian self esteem because the real threat of to west is Chinas rising economic superiority and only way to throw a spanner in is enanging China in a war, even a short one would have devasting effect on economy. None of the western country willing to engage China directly are propping up India to do their dirty job. Rising Indian racism, violence against minorties and human right abuses which are being ignored by champions of rights to line up some defence contracts are a sequel to this drama.

Its is upto Chinese on acting smart and throwing the spanner back into their mercinaries and rising above all differences. Failure of western strategy to tackle China will spell death for them as China is already enjoying more influence then American and Europeans combined in atleast 50% of the world.

Did you see the researchers name?in MIT and Harvard?
One is Chinese himself!
So just stop burning

 

[siegecrossbow]

Lets work towards it to be better and till then shut our mouths jumping around that we will be better than you.

Dont forget that we come from a land where modesty has been given a big value. Even if we were better we are not supposed to jump around over it.

I agree. Most Indians I know are smart, very modest, and hard working. There are, however, a few who gives their nation a bad name on this forum.

 

[Patrician]

Let's just get to work people. We have a long way to go and we've only just begun.

You don't score a goal until you score a goal.

 

[Patrician]

I agree. Most Indians I know are smart, very modest, and hard working. There are, however, a few who gives their nation a bad name on this forum.

Same is true with Chinese and same is true with pakistanis.

There are rotton apples everywhere.

 

[STD]

I just posted the positives,i was never too ecstatic about it,yes we should work hard because its our time to show the world,what Indian is!

 

[deckingraj]

I agree. Most Indians I know are smart, very modest, and hard working. There are, however, a few who gives their nation a bad name on this forum.

Attributing a person's comment with entire nations is a flawed logic...don't you think so???

Also there will always be varying view points irrespective of what nation's flag you carry.....reasoning out is the only way to prove your point....no???

 

[roach]

Well said, Patrician. Let's just go ahead and do it, and let others talk about it instead of tooting our own horn.

 

[somebozo]

Did you see the researchers name?in MIT and Harvard?
One is Chinese himself!
So just stop burning

Yes i did and one is chinese and one is indian..they are representing mere facts based on current political climate. Any analyst will speak the same language regardless of nationality. Dragging author nationality into issues has nothing to do here execpt for narrow mindness.

 

[deckingraj]

Most of such articles are part of western propoganda warfare to inflate indian self esteem because the real threat of to west is Chinas rising economic superiority and only way to throw a spanner in is enanging China in a war, even a short one would have devasting effect on economy. None of the western country willing to engage China directly are propping up India to do their dirty job.

ON contrary i see relations with China improving manifolds then what they were a decade back.....The relationship has matured to this level that even after uproar due to recent visa issue backlash did not go till snubbing all the defence relations, no??? So either these so called western propagandist are utter fools or you did not like the news.....Having said that these are all predictions based on today's gorund situations and backed with Assumptions that things will pan out the way they are assumed...What will happen only time will tell but saying that India actually do not have the potential to overtake China is living in fools paradise....

Rising Indian racism, violence against minorties and human right abuses which are being ignored by champions of rights to line up some defence contracts are a sequel to this drama.

This shows us the real intent of the poster....so no comments...

Its is upto Chinese on acting smart and throwing the spanner back into their mercinaries and rising above all differences. Failure of western strategy to tackle China will spell death for them as China is already enjoying more influence then American and Europeans combined in atleast 50% of the world.

hahahaha....that was a nice feel good factor...however miles away from reality....Not taking anything away from China(since they are undoubtedly smart and hardworking people) there are couple of decades away from reaching where you are projecting them right now....Remember their is only one super-power i.e. USA...China will eventually arrive but there is long way to go....