Notwithstanding reports stating that India’s GDP will surpass that of China in the coming years, a state-run Chinese think tank today said it is “too early” to hype India’s growth rate as it is still facing obstacles.
“The substantial quantities of reports over whether India’s growth rate will overtake that of China and make it the world’s fastest-growing large economy have reflected a wide confidence in its economy,” said an article by Zhao Gancheng, director of South Asia Studies at the Shanghai Institute for International Studies, published in the state- run Global Times.
India believes that it has already bailed its economy out of its slump, thus its forecasts are generally optimistic. Such optimism is not solely limited to India, but shared by both the IMF and the World Bank, the article said.
“Yet whether such predictions are inflated remains unexplained and difficult to verify,” it said.
The article came even as the World Bank figures projected that India’s GDP may officially surpass that of China as it is for the first time leading major emerging economies in growth chart.
“There is no point in the constant comparison of the Indian and Chinese economies. They are simply not comparable with each other,” the article said.
“However, once India’s growth rate catches up with China’s, it is bound to be hyped. That is because highlighting India’s economic figures is done for political ends,” it said.
Prime Minister Narendra Modi will keep beefing up support for investment-friendly policies. The country has its advantages, but also huge problems, such as unbalanced industrial structure and poor hardware to sustain the manufacturing, or resistance from local governments against decisions from the central government, it said.
“So, anything can happen in India, and it is too early to portray a rosy picture of its economy for now,” it said.
The article also noted that some will argue that India’s new growth figures are due to the revised calculation of GDP, which was launched in January.
“Whether the amendment was based on international measurements or its own national standards is not yet clear either. Therefore, it is too soon to draw any conclusion,” the article said.
“What is clear, however, is that given the Indian economy’s low starting point, low labour costs and enormous market potential, it is highly likely that the country will enjoy a rapid development in the future, if there is no global economic recession in the years to come,” it said.
“But in spite of all these, a starry eyed view is the last thing India needs for now, because its way of calculating GDP may need reforming, so does its economic structure,” it added.