Indian economy is likely to grow by 6.5 percent in 2013 and by 2014, it will be 7.2 percent, which is less that the current growth rate of China.
China's annual economic growth dipped to 7.4 percent in the third quarter, slowing for seven quarters in a row and leaving the economy on course for its weakest showing since 1999.
The Chinese economy is expected to gather momentum in the fourth quarter after an uptick in key economic activity indicators in October, following encouraging signs in September, thanks to new pro-growth policies rolled out by the government over recent months.
The impetus to rebirth is being echoed by the Chinese Academy of Social Sciences. The CASS said on Wednesday in its report on the economy that Beijing should intensify proactive fiscal policy.
China is yet to issue an official GDP forecast for 2013. However, as CASS is the premier state-backed centre for academic and policy research, its line of thinking is a reflection of the government thinking.
"We are cautiously optimistic on the outlook for 2013. We should be alert to possible downside risk and be prepared with enough policies," said the think-tank.
CASS's recommendations are in line with the central leadership's plans to make its macro-economic policies more targetted next year, including allowing more market-determined pricing of resource products and expanding value-added tax reforms.
Why China will achieve its target? China plans to maintain controls over the important real estate sector while allowing reform of state firms. This emphatic statement was made none other than the head of the ruling Communist Party Xi Jinping on Tuesday.
Whereas in India, the real estate sector is most disorganised and generates very little interest from the government, except for bouts of concessions. It is very important to have regulated real estate market in order to curb speculation in land prices and deprive the middle class of a decent shelter in their lifetime.
Even the issue of reforms in state-owned manufacturing units is holding the Indian economy and wasting precious resources. Very few state undertakings can claim to have made working profit, both in cash and social welfare.
"While allowing FDI in retail, the Goods and Services Tax, direct cash transfer of subsidies, and dedicated freight corridor will help, we believe further reforms on fiscal consolidation, financial liberalisation and infrastructure growth will be needed to sustain an improvement in trend growth," a recent report by Goldman Sachs said on Indian economy.
However, China has been working to revamp its outmoded tax regime and help reduce costs for business. It launched a trial tax reform in Shanghai a year ago to replace a business tax with a value-added tax for firms in the transportation and service industries. More cities and provinces have adopted the reform measure this year.
There are signs of economic revival in the world's second-largest economy, with two purchasing managers' index surveys earlier this week showing the pace of growth in the manufacturing sector has quickened.
Will Indian politicians shed their rhetoric and get into action mode to lift the country?