5.1.10

India can top China's growth by 2014


The Indian economy could surpass China's growth rate sooner than expected, most probably by 2014, chief economic advisor in the finance ministry Kaushik Basu said . He also saw the economy bouncing back to 9% growth next fiscal, while expansion this year would be 7.5% plus.
Basu said there was no case at the moment for monetary tightening--including hiking interest rates--and that the government was yet to decide on the timing of rolling back fiscal sops. "India crossing China's growth rate in the next four to five years is not impossibility. It is within the realm of possibility," Basu said at a seminar organisedbyFicci.
India's relatively large young population will help raise its savings rate to over 40% of GDP from 38%, thereby hastening growth, Basu said. "The high savings rate will trigger a period of sustained economic expansion. Savings rates (are) unlike stock market indices. Once you are there, you don't fluctuate.(The savings rate) is likely to cross 40%,"he said.
Basu said the economy will grow at 7.5% plus in the current fiscal on the back of the stronger growth projected in the fourth quarter. The economy grew 7.9% in the July-September quarter, higher than 6.1% in the preceding quarter.Making a case against raising interest rates, Basu said it is a very sector-specific inflation that is taking place, and it is expected to peter out in a few months. "There is no expectation of monetary tightening,nor do I believe is there a reason for it," Basu said. Wholesale food prices increased 19.83% for the week ended December 19, the fastest pace in 11 years. On fiscal policy, he said, "When exactly the folding back of the stimulus package will come I don't know, but the government is aware (that it has to exit). There is (also) a little bit of global coordination involved here."
Basu said the government's stimulus package had helped the economy, adding, "India does stand out as an economy that has handled the cris is very well."

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