Jim O'Neill: Emergence of AAP has made 2014 poll scenario trickier

NEW DELHI: There are strong chances that India and China will start outperforming the US in next few years, says Jim O'Neill, Former Chairman, Goldman Sachs AM. In an interview to ET Now, Jim O'Neill said, "There is a strong likelihood that in the next few years China and India are going to outperform the US again."

According to O'Neill, owing to the general elections, 2014 is a 'big year' for India. "India needs to borrow a bit of a Chinese leadership determination. The problems that people talk about in India, particularly the cyclical ones are quite easily solvable," O'Neill said.

The big problem with India is not the current account, feels O'Neill. "The problem is leadership. That is the issue that I will be looking for out of the election," he said.

Asked about the emergence of Aam Aadmi Party, O'Neill said, "This third party appears to have made it quite a bit trickier. I would imagine when you get closer to the general election they might not seem so attractive."

O'Neill is of the opinion that the 'India story' can quite easily turn positive. "On the bold assumption that you get stronger leadership after the election, the Indian story could quite easily turn very positive again. A part of that would be an environment of declining inflation and declining interest rates," he opined.

Asked about the likelihood of the Reserve Bank of India cutting interest rates, given the declining inflation, O'Neill said, "They are going to be cautious about cutting rates too prematurely. They do not want to do that and then have to start raising later."

Commenting on the Chinese economy, O'Neill said, "I find it hilarious that some people are focusing on a supposed worry about China. China is now an economy of 9.2 trillion. It is twice the size of Japan. It is adding a trillion dollars to global GDP every year," he said.