B&E: The gap between imports and exports is widening. Is it a worry? And how much can it impact the GDP growth in India?
AM: If we look at last 3 years trend, the gap has not widened and remained stable at around $100 billion. In fact, the good part of the story is that while there were speculations that the gap will widen, that has not been the case. Add to that, the fact that out forex reserves has reached $300 billion and remittances have been good is encouraging. FDI has kept swinging but it’s now on the upswing again.
B&E: Sectors like automobiles and real-estate are seeing decline in sales and many domestic companies are parking money outside rather than investing in India. Don’t you think that reflects on the economy negatively?
AM: Talking about parking money outside, I think it’s actually creating brand value. When Tata acquires Jaguar, they add to India’s export market. Moreover, this further helps in branding and technology transfer. Investing outside means benefits come in. A lot of firms are investing outside to get access to mineral resources, oil resources or coal. It means that in some ways, returns will come back to India in terms of earnings.
B&E: Do you think India is capable enough to sustain the growth that the country has seen for a longer period?
AM: Why not, later on it can absorb even 10% growth and do it continuously for two decades the way China did it. If China can do it, then I don’t see any inherent difficulty for India. As a system, the model is already there and all nations go through a particular phase when they remain on high growth path for two decades before they start slowing down. India will continue on this momentum and hopefully gain from the democratic dividend where China’s cliff of democracy would make it fall. Thus, projecting in the long run, India’s growth is far more superior to China.
B&E: Can India, with its host of problems, witness a decline in growth; can we by any chance view a recession by the year 2012?
AM: If the world markets collapses, India will surely feel the pain, because then, there is nothing much in your hand. Then, India will certainly have to be worried. But as long as the Central bank does not become over ambitious and try to curtail the growth story and worry about Inflation, we should be able to manage the impact. Inflation is important, but they have to be very clear about their policies and policy implications. Otherwise, it can choke the growth story.
AM: If we look at last 3 years trend, the gap has not widened and remained stable at around $100 billion. In fact, the good part of the story is that while there were speculations that the gap will widen, that has not been the case. Add to that, the fact that out forex reserves has reached $300 billion and remittances have been good is encouraging. FDI has kept swinging but it’s now on the upswing again.
B&E: Sectors like automobiles and real-estate are seeing decline in sales and many domestic companies are parking money outside rather than investing in India. Don’t you think that reflects on the economy negatively?
AM: Talking about parking money outside, I think it’s actually creating brand value. When Tata acquires Jaguar, they add to India’s export market. Moreover, this further helps in branding and technology transfer. Investing outside means benefits come in. A lot of firms are investing outside to get access to mineral resources, oil resources or coal. It means that in some ways, returns will come back to India in terms of earnings.
B&E: Do you think India is capable enough to sustain the growth that the country has seen for a longer period?
AM: Why not, later on it can absorb even 10% growth and do it continuously for two decades the way China did it. If China can do it, then I don’t see any inherent difficulty for India. As a system, the model is already there and all nations go through a particular phase when they remain on high growth path for two decades before they start slowing down. India will continue on this momentum and hopefully gain from the democratic dividend where China’s cliff of democracy would make it fall. Thus, projecting in the long run, India’s growth is far more superior to China.
B&E: Can India, with its host of problems, witness a decline in growth; can we by any chance view a recession by the year 2012?
AM: If the world markets collapses, India will surely feel the pain, because then, there is nothing much in your hand. Then, India will certainly have to be worried. But as long as the Central bank does not become over ambitious and try to curtail the growth story and worry about Inflation, we should be able to manage the impact. Inflation is important, but they have to be very clear about their policies and policy implications. Otherwise, it can choke the growth story.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
