Indian tortoise can grow faster than Chinese hare: Noted economist Nourel Roubini

Davos, Jan 23: India has the potential to overtake China in terms of growth rate in the coming years, provided it implements reforms in a big way, noted economist Nourel Roubini said today.

The improvement in India's growth rate has so far mostly been because of 'luck' even as the country is more safe from global shocks, he added. Reiterating his earlier prediction that the Indian tortoise will take over Chinese hare, Roubini, however, said India will have to wait longer to match it in terms of overall size of GDP.

"I do believe (in that prediction) because China is slowing down and next year it may be below 6 per cent, from about 7 per cent now.

"At the same time I don't see a reason why India cannot grow faster. They can go to 7 per cent soon and even more than that. In the next decade there is no reason why India should not grow at a rate more than China.

"Unfortunately, it will take many more years for Indian GDP to match the size of that of China. But my statement is conditional on implementation of a series of reforms that India needs to undertake," he said at a session on India's next decade here at the World Economic Forum Annual Meeting here.

Roubini, however, said that last year India was part of Fragile Five, since when things have improved but that has also improved because of luck.

"There has been fall in oil prices which has helped on many fronts including on inflation, subsidy and interest rates. Growth is improving but has not been exceptional. The private sector investment has not picked up which can help GDP rise significantly.

"A large number of private sector entities are highly indebted, the public sector banks are under stress and there is a need to convert savings into investments.

"Good news is that fiscal imbalances are improving but bad news is that growth is not improving that much. Government is right in saying it would not do big bang reforms, but still it need to do big things and do radical reforms. Its a case of half of glass is positive," Roubini said.

According to him, the world economy is running on a "four-engine airplane" where one engine is the US, the second is euro zone, third is Japan and fourth is China.

"Good news is that the US is recovering, bad news is in euro zone, Japan made some wrong decisions and China is slowing down. In case of India, it is more safe from global shocks," he said.

PTI