Emerging economies such as India and Brazil have a comparative advantage over China which is still dependent on trade and a weak currency to spur its growth.
However, the challenge for India will be to sustain its growth momentum and also keep its inflation under check, Prof Nouriel Roubini, noted economist and chairman of Roubini Global Economics, said here.
Domestic market edge
Speaking at Lakshmipat Singhania Centennial Lecture in the Capital, the noted economist who predicted the global recession in 2006 said, “In the next few years, it is possible that the growth of India might surpass that of China, with the country maintaining a close to double-digit growth, while China might slow down to eight per cent or so.”
Prof Roubini said countries such as India, Indonesia, Brazil and Turkey, with their increasing reliance on domestic markets, have a ‘distinct edge'.
“As far as sustaining growth is concerned, China will have more challenges than India. Their economy is characterised by dependence on the US as the consumer of first and last resort, a mode of growth that has been challenged today,” he added.
Challenges
Prof Roubini said the challenges for India remain in tackling structural problems that are fuelling inflation. He said the Reserve Bank of India has been ahead of the curve in taking monetary policy decisions.
He also advocated faster privatisation of public sector units to enhance competition and efficiency, easing rigidity in the labour markets, increasing investment in infrastructure, urbanisation and skill development.
Retail FDI
The noted economist said India needs to lift curbs on foreign investment in retail and scale up its infrastructure.
“India has a liberalised FDI regime but it is not fully liberalised. It would require greater amount of liberalisation. For example opening up the retail sector to the foreign direct investment will ensure that distribution system is more efficient, productive and competitive,” he added.
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