Saturday, January 30, 2010
India vs China
Here is an interesting article on time.com. It tells economically which among the two : India and China is stable and why?
I guess one of the major factor, could be our Prime Minister, Dr. Manmohan Singh. With is vast experience in finance industry and brilliant qualifications, he was able to steer India through recession.
From the article you can see that:
"The government used the same tools as every other to support growth when the financial crisis hit – cutting interest rates, offering tax breaks and increasing fiscal spending – but the scale was smaller than in China." These are the exact steps that the financial gurus in the US are advising President Obama to take. Well, interest-rates have come down in US and fiscal spending has increased, but what really needs to be done are tax-breaks.
Another important point to note in fiscal spending ( stimulus money), our spending was less: just 3% of our GDP. That helped us provide the initial boost, and at the same time, didnt leave us with a hole. The hols could better be described as inflation. Well, there is inflation, agreed, but its under control.
Well whatever said and done, the reason why Indian economy is so strong, according to me, is because our people save, and we are so many :) ...so we are self sustained. From the above article:
"What we see [in India] is a fundamental domestic demand story that doesn't stall in the time of a global downturn,"
Also credit is hard to get (banks are heavily regulated) and hence we dont indulge ourselves in spending unwisely.
Lets hope this continues, and we at least achieve the the goal of bringing 30-40% of our population above the poverty-line.