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India can grow over 8-8.5%

July 16th, 2008 Posted in Economics - Indicators, Policy and Trends, India

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[Confederation of Indian Industry President and ICICI Bank Managing Director K V Kamath ] noted with satisfaction India having a strong savings rate of 34.8 per cent, investment rate of 35.9 per cent and incremental capital-output ratio (ICOR) of four per cent, better than China(4.3 per cent) and Brazil (5.1 per cent). The country had a strong domestic consumption of 6.7 per cent of GDP in 2007-08 and strong 20 per cent growth in export and foreign exchange reserves at $312 billion, he observed.

He expected the Reserve Bank of India to take ‘conservative’ measures in its credit policy later this month to check the high inflation without affecting industry gorwth. The Indian banking system was in good stead now, with cleaning up of Non-Performing Assets (NPAs) in the last ten years.

Setting economic aspirations for medium term, he said the country need to double per capita income in ten years by aspiring for a ten per cent GDP growth. Manufacturing share in growth should be increased to 25 per cent by 2020.

Outlining the development agenda for medium term, he said the country should provide better access to health, education and skills for its people, make housing affordable and develop model cities to accommodate future urban migration.

He said the CII was deepening engagement with Brazil for cooperation in agriculture, with Russia in energy and with China to build on complementary strengths in various fields.

By 2022, India could be the World’s largest pool of trained manpower, leaders in industry and commerce, accounting for 10 per cent of world trade and a source of global innovations, he envisaged.

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Brazil, economic growth, India

BRIC growth prospects

July 6th, 2008 Posted in BRICs

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BRIC Countries (Brazil, Russia, India and China).

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via DB Research
there are also structural factors at work that bode well for the medium-term growth prospects of the BRICs. These factors can be captured in a simple growth accounting framework. Economic growth can be broken down into several components, namely changes in labour and capital inputs, and total factor productivity. (Total factor productivity captures technological progress and/ or efficiency gains and is the residual that is not explained by changes in labour and capital inputs.) Growth accounting provides an analytical framework to assess medium-term economic growth dynamics.

Labour supply dynamics will remain favourable in Brazil and India thanks to demographic trends and/or low urbanisation ratios. In Brazil and India the working age population will continue to expand until the middle of the current century, while in China it will decline after 2015 and in Russia it is at risk of collapsing. From a purely demographic point of view, India faces the most promising prospects, combining solid population growth and a low degree of urbanisation. While this may pose challenges of its own (in terms of urban development and infrastructure), it will be supportive of growth dynamics.
Recent capital accumulation trends favour China and India. Assuming that investment ratios do not change dramatically over the next few years, China and India will face much brighter prospects than Brazil or Russia. Currently domestic investment ratios amount to around 40% and 30% of GDP in China and India, respectively, versus an investment ratio of 20% of GDP (or less) in Brazil and Russia (see chart).

The projected changes in the factors underpinning an economy’s growth potential also suggest that the China and India economies will continue to grow much faster than Brazil and Russia over the medium term.

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