India to grow faster than China in 2013

Bolstered by industrialisation, India is projected to grow at a fasterclip than neighbouring China with a 9 per cent economic expansion in 2013, says a report by global consultancy firm Ernst & Young. It cautioned, however, that India needs to tackle rising inflation and said the country's growth this year would be 7.2 per cent, much lower than 8.2 per cent recorded last year. India's growth rate would riseto 8 per cent next year, according to the report released today. "The forecast pegs India's real GDP growth rate to be the highest among all the Rapid Growth Markets (RGMs) starting in CY 2013, when theeconomy is expected to growth 9.5 per cent, followed by China at 9 per cent," it said. In 2014, India is expected to see an expansion of 9 per cent while Chinese would see a growth of 8.6 per cent. The RGMs Forecast focuses on 25 nations -- including India, China, Brazil and Russia -- that display stronggrowth potential and are, or could be, strategically important for business. India and China's would be able to better withstand a likely slowdown mainly on account of large size of their domestic markets as well as from beneficial effects of lower oil and commodity prices, E&Y said. It pointed out that even though the overall outlook for India is positive, the country would need to address rising inflation. Headline inflation, which has been hovering above the 9 per cent mark since December 2010, stood at 9.72per cent in September. "... provided India's inflation does start to fall back by theend of this year and the US and EU economies do not slip back into recession, the soft patch for Indian growth should be relatively short-lived," the report noted. E&Y said that once inflation is in check and interest ratesare no longer rising, consumers would be more willing to spend. This would support a general improvement in business environment, resulting in steady acceleration in growthnext year. "India enjoys an advantage in its high savings and investment rates, currently athird of the GDP; relatively low GDP per capita on purchasing power parity giving significant potential forgrowth and continuing industrialisation and urbanisation," the report said. E&Y India's Partner & India Markets Leader Farokh Balsara noted that India's consumption-led economy continues to make the country a highly attractive investment destination in the short to medium term. Courtesy: TIMES OF INDIA