How soon will India's growth rate exceed China's?

It is not clear that the Indian government is going to do much any time soon to change the things that impede growth in the country (think infrastructure, think bureaucracy and corruption....)

However, it is now clear that India's growth rate will, at some point, overtake China's growth rate.

The question is: when?

I think it oculd be as early as next year, and at the latest by 2015.

Why? Because in a slowing global economy, export-based "emerging economies" such as China's are going to be hit more than "emerging economies" which are not as much based on exports - e.g. India's.

Moreover, as China's economy slows and approaches India's rate of growth, investors' current risk-reward perception regarding the two countries will rapidly reverse, specially given the negative experiences of Western companies in China - which at least a few multinationals are beginning to express, having got fed up of the games that China has been playing.

And there is a further factor: China's "demographic dividend" is set to stabilise somewhere around 2015, while India's "demographic dividend" is set to continue expanding for perhaps 30 years longer. By around 2015 at the latest, that fact will begin to weigh on the calculations of investors.

Naturally, the above does not include scenarios such as political collapse in either country, which is possible if China and India do not make much more vigorous moves in the direction of human rights, democracy, genuine liberalisation, actual care for the environment and social justice, and so on.

At present, keeping growth going is a "no brainer" in both countries. But, even at present, what is not a "no brainer" is how to focus on human rights, democracy, genuine liberalisation, actual care for the environment and social justice, and so on, in such a way as to avoid disadvantaging the current elite too much.

That is not impossible.

However, it does require articulation, conceptualisation and, more important, implementation - which neither country has done in a sufficiently substantial way, so far. Sphere: Related Content