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Last updated: 01 Sep, 2015  

India.flag.9.thmb.jpg Can India become global growth engine

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Bikky Khosla | 01 Sep, 2015
Is the China slowdown an opportunity for India? The Chinese crisis may be roiling global markets, but policy makers in India have had a uniform response: India is resilient to the crisis and China's loss is going to be India's gain. The RBI governor is of the opinion that China woes don't point to any urgent risk of a global crisis. Some top ministers and experts, going one step ahead, have viewed that the slowdown in China offers an opportunity to India to become a key driver of the global economy. Does this view hold any water? If so, is India's response to this opportunity adequate?

I strongly believe that we are today in a better shape compared to China. The Chinese economy is slowing, but India is gathering pace. Over the years, state-driven investments have created excess capacity in most of the industrial sectors in China, but in India the infrastructure sector alone can absorb trillions of dollars. During the 2007-14 period, China's debt has risen by a whopping 101 percent compared to India's 5 percent. In addition, our domestic consumption is higher than China and we have a rising working age population while China has not. In the background of this, it is clearly evident that the China crisis offers a big opportunity to India.

Our exports can also benefit from the crisis. It is true that slowdown in the Chinese market can have adverse effects on exports from some of our select sectors, such as steel, cement and auto parts, but our overall exports to China amount only to about $11 to $12 billion. Similarly, the Chinese slowdown may be potent enough to affect global growth, but again India's share of global trade is as little as 2 percent. So, it seems improbable that the struggling Chinese economy could have any binding constraint on our exports. In contrast, I think a large chunk of space in the global export market would be vacated by China, thereby creating a big opportunity for Indian exporters. It is also likely that lower commodity and crude prices will inflate our import bill.

But growth does not happen all by itself, neither exports do. China is shifting from an export-driven, investment-led economic model to one driven by domestic consumption and this transition holds massive significance to the world economy as well as India. Our policy makers need to look at the strategic implications of this shift and prepare long-term strategies accordingly. We have a lot to do in terms of infrastructure, manufacturing, export competitiveness and ease of doing business. Reforms must take place fast and at the ground level. We need to shape policies looking at a much longer time-frame. Otherwise, we will miss the opportunity to take the baton of global growth from China.
 
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Growth myth
Kk | Thu Sep 24 01:20:17 2015
The author has not visited china. It is better he must make a trip first.


Can India became global engine
Ayush Lahiri | Fri Sep 11 08:38:54 2015
I think this will be impossible at this moment.Our main strength is manpower.Since 1947 we could not realised the value of manpower.As well as we could not accelerate and fulfill our demand.Another problem is political compulsion.Which was very much effected from 1990. Now we can only given a message to our next generation how to generate us in this crisis. A minor percent of people maybe gained.


Boost trade with Africa
TURAY FODAY | Thu Sep 10 15:58:12 2015
If India want to overtake China, they must opened Trade with Africa countries.The product of INDIA IS FAR MORE BETTER THAN CHINA:The Chinese market so great in Africa,as the European market.they are gaining more than any European or American business. The Chinese is developing Africa that any other Nation in the World, because they are cleaver and not greedy. India changed your policies of Conservativeness, if you want to be a market in AFRICA:


Can India become global growth engine
Al Diaz | Mon Sep 7 01:59:40 2015
India should push the shoe sector to begin with.First rule is to become flexible in the business relationships,and by saying this I do not mean giving credits but rather moderate asking,and talking,you ask too many unnecessary questions,and accomplish little. You might not like my words but this is how I feel about India. I hope you succeed with your planes.There is a great country there!.


Global Engine
Chemical Technology Systems | Sat Sep 5 09:07:28 2015
I do not think so -India seems to import vast amounts of goods, and then to sell them into World Markets as their own sources. This incurs vast carbon miles and seems illogical,when India needs to acquire its own technology and to sell under its own label, then it might succeed. This creating manufacturing , jobs , employment and a developing future.


Global Growth Coal Engine
Rahul Mahajan | Sat Sep 5 08:40:21 2015
India should not run for being Global Growth Engine but should act for sustainable future for such large population. When the population will be in good position,then they should act or they will be said to be better in running for global growth engine.15 months of Modi rule does not create any future,whereas we should remember that our Independence is for last 65 years only.


India growth
Economist | Fri Sep 4 13:58:42 2015
Without interest rates in India becoming lower than China, this discussion is a pipe dream. India needs a real world pro growth RBI Governor. Only then can it take over markets vacated by China. RBI is the biggest impediment.


India growth
Anderson Mbogoh | Fri Sep 4 08:28:22 2015
Your timely article came after i visited tradeindia and wondered why we are not trading with you! I was searching for a coffee machine and your products left me amazed. So in answer to your question, i believe India can take word leadership in this. What more, trust is higher compared to the Chinese products.


Yes! India can be the global engine
Shashi Ranjan | Fri Sep 4 07:21:13 2015
Yes! India can be the global engine, when the growth comes on higher track, When India's export market rise, when trade deficit go less, when price inflation at the balance, when India's BOP showing positive figure, when tax collection will increase, I m sure about that, India will become the global growth engine.


What can India contribute to global industrial society?
Joy Abraham | Fri Sep 4 05:35:47 2015
Can you name out any products other than the human workers as labors that contributed to the global industrial society...Try to look at you and say Myths or mythology or TV serials are more predominant other than any research endeavors. Assess it and say what is our role in the industrial world.


STIMULATE SME GROWTH
CK Murali | Fri Sep 4 03:34:46 2015
With a large young population and 1.25 Billion market strength, India could certainly be the leader to stimulate Global growth. We have to learn from other's failure , mend our way and and reorganise our approach to make use of the opportunities head on. Our thousands of educational institutes may not serve it's purpose if the curriculum is revised to focus on the real requirements. Enlist the Retired industry leaders with proven record to assist set up SME clusters all over India. They can do a great jo on a substantial fee, by advising potential entrepreneurs to identify right product and support them in marketing. Fund is not a problem as most of the NRIs and retired people have substantial savings. They will be more then willing to invest their savings to fruitfully engage themselves in their post retirement which can also provide job for their unemployed educated offspring. But who will guarantee a nominal return in the environment of irresponsible, labour unions, arrogant bribe extracting politicians and unending approvals. These retirees are earning a meagre below inflation 6% FD interest, where as bank lend them out at 13% to industry, where Industry make a profit of at least 20%. Retirees could be benefited by at least additional 20% income, if they are given guidance to manufacture simple product, that is being imported from China. This will create more jobs, and reduce currency outflow . Will the policy makers ever address the root cause to stimulate growth


Worried about irresponsible politicians
RAMESH KERALA | Thu Sep 3 17:15:13 2015
As said above we have to grab these opportunities by adequately hasten the reforms, but alas what is happening in our parliament is showing the commitment of our politicians when dealing with matters of national interest.


Can India become global growth engine
Dr. Kamal K. Tiwari,M.S,M.S M.D. B.Tech/ I.I.T/K | Thu Sep 3 15:21:42 2015
INDIA NEEDS TO TAKE AGGRESSIVE ACTION IN THE FOLLOWING AREA. IT IS HIGHLY IMPERATIVE TO BE PROMPT AND DECISIVE IN THE AREAS. Infrastructure, Manufacturing, Export Competitiveness and Ease of doing Business.


Very true observations
A K Saraf | Thu Sep 3 11:48:10 2015
It needs to ascertain reasons of slowdown in china. Is it due to fall in global demand or some other internal reasons. If it is due to fall in Global demand, India may also feel thee heat. However if this is due to other reasons it definitely is an opportunity for India. Your observations that if India is to grab this opportunity, the Infrastructure needs to be developed and reforms to be pushed to gain confidence of foreign buyers and create ease of doing business , are very true. Thanks,


Impact on Indian Economy
P.S.Biradar | Thu Sep 3 11:36:35 2015
Yes, there will not be much impact on Indian economy. Another aspect is that this is right time that we should not import anything from China. As a citizen of India, everybody should think positively and act accordingly.


Translate this article into Hindi Language and arrange for wide circulation among Indians
MK Pratap, 9111999210 | Thu Sep 3 09:08:48 2015
Respected Sir/Mam., It is an excellent article it should be discussed minutely among our Indian experts of the subject. I think this opportunity has come after centuries and will may be or may not be come again after centuries. So please translate this article into Hindi Language and arrange for wide circulation among Indians. MK Pratap, 9111999210


India a Super Power
ashwin shetty | Thu Sep 3 05:06:25 2015
India is such a country of lost opportunities and talent. I feel, the red tape can be very effectively encountered by empowering each and every bureaucrat to take bold decisions which are very clearly correct. Empowerment has been restricted citing favouritism and corruption. But lack of power has not ensured that both these have been countered. Both are present in rampant proportions. To curb this, monitoring the assets of bureaucrats and relatives by a red-flagging intelligent-ware linked with aadhar card details should be introduced. Link all transactions to aadhar, and monitor abnormal activities of officers, ministers and relatives. Once it is automated no surveillance is necessary. Only red-flas need to be probed. Once you have a system surveillance it will automatically be curbed. also everyone should be encouraged to settle rather than prolong and litigate,especially matters of technical issues which will not generate revenue. This will allow businesses to concentrate on business rather than tax related cases etc. Idea should be that a business concern at least 95% on biz and only 5% on other activities, growth can happen only with encouragement and freedom.


India lacks skilled manpower
Ashok Puri | Wed Sep 2 17:19:49 2015
There is great opportunity in the China crisis and slowdown for India to take advantage of. But India in spite of its young population seriously lacks skilled manpower. The present education system is churning out Engineers and graduates unfit for employment.Our ITI's fail to teach adequate skills. Education system needs to include more practical training associated with theory to create skilled manpower ready to take up existing jobs. The NCVT should be introduced across all under graduate programs. Cost if skilled manpower should be controlled and production enhanced by using CAD/CAM machines. The library of Taxes imposed on Industry today should be removed. Companies Act 2013 compliance not to apply to SSI units. One single PAN for all income tax matters and one VAT number for all manufacturing Units. Minimum wage structure to be linked to productivity of employees. High wages,taxes and manufacturing costs are breaking the back of Industry today. Contract work/piece rate job work to be encouraged. And most important preference for education and jobs to be on merit basis and not on Caste reservation. The present backward class quota is killing the output of skilled manpower from our Universities and ITI's. Preference to SC/ST/OBC should be given only if merit is at par with general category candidates. No private industry or SSI Units can achieve manufacturing excellence by employing sub standard labour. Social Security Saving Schemes should be linked to income tax.


 
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