India to be world's fastest growing economy

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New Delhi, Aug 17: India will become the world's fastest growing economy by 2013-15, finds a new report by Morgan Stanley, authored by Chetan Ahya (managing director for Asia and India economist and Tanvee Gupta.

However, the government"s chief economic advisor Kaushik Basu has been forecasting such a development as well.

According to the report, “GDP growth in China has averaged 10 percent annually over the past 30 years, compared with 6.2 percent in India. However, China"s GDP grew 16 times to $5 trillion whereas India"s rose seven times to $1.2 trillion. China"s exports surged 65 times over period to $1,330 billion while India"s exports increased 22 times to $250 billion."

China has overtaken Japan to become the world"s second-largest economy. China"s demographic transition pushed up its savings rate above 30 percent in 1985, while India"s savings rate crossed that level in 2005. India"s consumption level will now come down, even as China"s will rise.

Morgan Stanley forecast is the assumption that India will significantly jack up its expenditure on infrastructure and machinery. Infrastructure expenditure has gone up from 5.4 percent of GDP in 2005 to 7.5 percent in 2009 and is poised to go up to 8 percent of GDP in 2010.

Over 2012-17, the forecast is that India"s infrastructure spend would be $1 trillion as compared with $530 million over the previous five-year period.

Another assumption is on the quantity and quality of the young people coming into the workforce will help India to become the largest contributor to the world"s workforce.

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