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Jun. 8 – Stephen Roach, Chairman of JP Morgan, has stated that India is better placed than China to beat the global downturn. In views that have echoed 2point6billion.com’s comments over the past few months, Roach told media in India that “India is better poised than China and other Asian countries to cope with the global recession as its dependence on exports is considerably less.”
Observing that the global economy overall is likely to grow at just 1.5 percent over the next three years, and that 75 percent of the global economies are currently contracting, Roach indicated that India’s growth for 2009 was likely to reach 6.5 percent. However, he warned that India’s main problem is its fiscal deficit, and that more spending on infrastructure would be needed. These are two measures that the newly elected government has already pin-pointed for immediate action.
Compared to China, Roach cited other advantages India has, such as high domestic savings, good inflows of foreign direct investment, an increasing share of infrastructure spending as part of GDP and solid financial institutions. Going further, Roach also stated that for the first time in a dozen years, he was “more optimistic about the prospects in India than I am in China.”
“What India has lacked in the past is the political impetus to have interplay between the micro and macro. The recent election results have changed the impetus for reforms,” Roach said, noting that the new Congress-led government would be able to push forward with reforms.
“It is ironic that India has come up very nicely at a time when the world has fallen in love with the China story,” said Roach.
