Region of growth
The Indian growth story remains a beacon of hope.
By ET Bureau |
Most members of the ET awards jury who participated in a lively discussion on India���s prospects in the backdrop of a global slowdown felt the economy will grow by 7% to 8% in 2008-09. The chairperson of the ET jury and global head of Pepsico, Indra Nooyi, chose to link India���s fate more directly with that of the United States.
She said India���s GDP would most likely grow at 6% higher than that of the United States. So, if the US growth rate is, say 1% in 2008, then India���s GDP should grow at 7%. In effect, Nooyi clearly believes in pretty much a linear coupling of growth between India and the US.
The head of global markets for Deutsche bank, Anshu Jain, was optimistic that India could post a GDP growth of up to 7.5%. So were other jury members such as Stanchart Global Head Peter Sands and HDFC chairman Deepak Parekh. Indeed, what was interesting was a general note of optimism among these business leaders about India���s domestically driven growth story.
Union minister for commerce and industry Kamal Nath too pointedly argued that India will grow even bigger as a ���parking lot��� for global investments. It is here that consumer demand will grow consistently over the next few decades and give the best return on investment.
Of course, the debate over how much India is coupled or decoupled with the United States economy remains a hotly contested subject. If Indra Nooyi is to be believed there is a one-to-one relationship between the two. Sure, there are many who do not subscribe to this.
They claim India may be coupled in a short to medium term, but is certainly decoupling in the longer run. However, there seems to be a consensus that in the short to medium term India, and indeed other fast growing emerging economies, will get hit by a US recession.
Even if India���s GDP growth decelerates by 2-3 percentage points, it is bound to cause pain. Businesses will have to undergo belt tightening through 2008 and 2009. Let us face it. The unprecedented growth party of 2003-08 could not have gone on forever. However, even as the three big OECD economic blocs ��� US,EU and Japan ��� gradually slip into a recession, the only beacon of hope is provided by the growing markets of India, China and the other emerging economies.
She said India���s GDP would most likely grow at 6% higher than that of the United States. So, if the US growth rate is, say 1% in 2008, then India���s GDP should grow at 7%. In effect, Nooyi clearly believes in pretty much a linear coupling of growth between India and the US.
The head of global markets for Deutsche bank, Anshu Jain, was optimistic that India could post a GDP growth of up to 7.5%. So were other jury members such as Stanchart Global Head Peter Sands and HDFC chairman Deepak Parekh. Indeed, what was interesting was a general note of optimism among these business leaders about India���s domestically driven growth story.
Union minister for commerce and industry Kamal Nath too pointedly argued that India will grow even bigger as a ���parking lot��� for global investments. It is here that consumer demand will grow consistently over the next few decades and give the best return on investment.
Of course, the debate over how much India is coupled or decoupled with the United States economy remains a hotly contested subject. If Indra Nooyi is to be believed there is a one-to-one relationship between the two. Sure, there are many who do not subscribe to this.
They claim India may be coupled in a short to medium term, but is certainly decoupling in the longer run. However, there seems to be a consensus that in the short to medium term India, and indeed other fast growing emerging economies, will get hit by a US recession.
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Even if India���s GDP growth decelerates by 2-3 percentage points, it is bound to cause pain. Businesses will have to undergo belt tightening through 2008 and 2009. Let us face it. The unprecedented growth party of 2003-08 could not have gone on forever. However, even as the three big OECD economic blocs ��� US,EU and Japan ��� gradually slip into a recession, the only beacon of hope is provided by the growing markets of India, China and the other emerging economies.
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