All it the brighter side of the current downturn. India may pip export-dependent China in the last quarter of FY09 and emerge as the fastest growing nation among all large economies.
As China’s GDP growth rate dropped to 6.8% during the October-December quarter and is expected to go down further, the Indian government has become hyper-active to achieve at least a 6.5% growth in Q4 to register a win over China.
If India achieves a better growth rate than China even for one quarter, the message will go across to the world and help India in wooing foreign capital, waiting to chase growth stories. Already, government officials in India have been highlighting reports of a few investment analysts who doubted China’s official GDP numbers and claimed that it could just be in the positive territory in the last quarter.
A secretary in the government of India confirmed to SundayET that India has a brighter chance of overtaking China in the last quarter of FY09, or Q1 in case of China which follows the calendar year.
“China is heavily dependent on exports and the way things are unfolding China’s GDP for January-March quarter would be quite low. We have so far achieved 7.9% and 7.6% growth in the first two quarters, according to the provisional numbers. Though our Q3 number, to be announced by month end, is expected to be less than the comparable number in China (6.8% in Oct-Dec, 08), the softening of interest rates will stimulate demand and ensure a faster growth rate than China in Q4,” he said.
Though the Chinese economy grew at 9% during 2008, down from the revised 13% growth rate in 2007, the last quarter number (6.8%) has made the Indian authorities hopeful that India might be able to pip China in GDP growth. As China’s export constitutes 37% of its economy against 13% in the case of India, the recession in the developed world will make China suffer the most.
PM’s economic advisory council (EAC) member Satish C Jha said he won’t be surprised if India grew faster than China. “The situation in China is worse than us. Exports are drastically coming down and China is hit hard. Our economy is driven more by domestic demand and our rural economy is much more resilient than that of China. If our stimulus packages are implemented properly, I won’t be surprised if India pips China in GDP growth,” Mr Jha said.