The title of this post may sound cliche, but the question is a valid one.
Many people may argue, that India is already an economic powerhouse, registering stellar growth rates and a booming economy. However, these are the beginning stages, and the important question is whether India will sustain similar growth, or even make it better?
According to Economist Intelligence Unit and the Columbia Program on International Investment (CPII), China attracts ten times more FDI compared to India, yet FDI is considered among the most important factor driving the Indian economy.
An analysis by Fortune titled “Why India will overtake China” talks about democracy driving India ahead of China, but also mentions facts like “it takes one month to setup a business in China, but 3 months in India”. Although I do not intend to compare China and India, it is obvious, that if China grows like it does today, it will take away a major share from other south asian countries, including India.
In my opinion, the young, educated and English speaking population of India can drive her to be a noticeable economic power. This, coupled with the “reverse brain drain” that India is experiencing will ensure that the growth momentum that India is seeing will stay for a long time. Democracy, on the other hand, is a double-edged sword. On the one hand it builds confidence amongst international investors, but on the other hand, the bureaucracy inherent in democracy slows down processes and inhibits economic growth.
Another article, titled “Can India overtake China?“, written by Yasheng Huang and Tarun Khanna, talks about the different growth models the two countries have adopted. The authors claim that India encourages entrepreneurship and local businesses, while hardly any Chinese industries have been started by local Chinese entrepreneurs – they have all been a result of direct FDI from (mostly) western companies.
What are your thoughts – can India match China’s growth, or at least continue to grow along with China? Please post your thoughts.
