“India’s economy grew faster than China’s in the quarter through March, data showed on Friday, but a sharp downward revision for the previous quarter fuelled doubts about the accuracy of a new method used to measure economic activity,” Reuters reports.
Asia’s third-largest economy grew 7.5 percent year-on-year in the last quarter. The result is better than China’s 7 percent growth in the same quarter. A Reuters poll of economists forecast 7.3 percent growth, which is slightly below the actual number.
Last December quarter India also grew faster than China. However, on Friday the Central Statistics Office revised drastically growth down to 6.6 percent from 7.5 percent, distorting the picture of the actual trend.
“At face value, today’s GDP figures for (January-March) suggest that India is the fastest-growing major economy in the world,” said Shilan Shah, India Economist at Capital Economics.
“In reality though, the GDP data remain wildly inconsistent with numerous other indicators that point to continued slack in the economy.“
Although the new GDP calculation methodology has raised many questions about the data accuracy, long term India is well positioned to win the economic race. With the slowing China’s economy and rasing wages manufacturers are starting to look for a cheaper deal and this maybe India’s golden opportunity. Why?
- Labor is far cheaper in India. The hourly manufacturing cost averages about $0.92, nearly a quarter of the bill in China which is $3.52 on average per hour.
- In 2013 manufacturing accounted for 13 percent of India’s GDP which is less than half of that seen in China, 30 percent. Prime Minister Narendra Modi wants to lift that share significantly.
Ajit Gulabchand, the chairman and Managing Director of Hindustan Construction Company sums up the India’s position like this: “India has the land, India has the people, India has everything. Why wouldn’t global manufacturers come?”
There are already big names in India like: Abbott, Ford, Nidec, Panasonic or Yamaha. Hopefully there will be more to come. However, India’s weakness is still relatively poor infrastructure investments particularly in roads, airports or railways against the investment levels seen in China. Narendra Modi is well aware of the gap infrastructure issue
India Prime Minister Narendra Modi is well aware of the gap infrastructure issue and knows it will take years to catch up with China. The good thing about him is that he is a very ambitious fighter, not giving up easily and has a clear vision of the future India. He has already launched infrastructure projects covering the following areas:
- Power
- Railways
- Roadways
- Shipping and Aviation
- Next-Generation Infrastructure
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