EconoMonitor

Nouriel Roubini's Global EconoMonitor

India, China, and V vs. U

The Economic Times: India — ET NOW’s Shaili Chopra moderated a roundtable discussion among Nouriel Roubini, Chanda Kochhar, Adi Godrej, Sanjay Nayar, N Chandrasekaran and MV Nair at the Edelweiss India Conference 2010.

Excerpts:

There was a time when everybody used to talk which is the next big opportunity. Today, we think of which is the next big trough. So are we constantly looking out for the worst case?

Nouriel Roubini:

That’s really the ‘bad psychology’ in the sense that we have gone through so much economic and financial turmoil in the past couple of years both in the US, in Europe and it has spilled over a little bit also to emerging markets. Even investors are now more optimistic than worried about the next downside risk. So, you have to be balanced. You have to see what are the opportunities. In the US, Europe and Japan, there is concern about the risk and vulnerability, but when I visit countries like India, China, rest of Asia and Brazil and even other parts of emerging markets, there is more of a sense that things are going better and the opportunities are greater than the downside risks as well.

Chanda Kochhar:

I am actually looking for the next big opportunity. In the past few years, our growth has been really moving on the basis of domestic consumption. This is an advantage that will stay with us for decades. But I am now seeing the next driver of growth which is investment. There is a lot of investment being planned for manufacturing and infrastructure. And that’s going to create a further multiplier effect, taking our GDP growth to much higher levels.

Where is the turning point, between being an economy that was slowing and believing that we are confident about this economic recovery?

Sanjay Nayar:

I am not really sure where that points to get a sustainable double-digit growth rate. Look at IP numbers for the past few quarters, auto, cement despatches, non-oil imports, all of those are in right direction. We really have not unlocked the capital available in the country and the reason is the fiscal being what it is, it does take away a lot of private savings. So, if you want to really tackle and have a sustainable model, we need the supply side to build, which is really infrastructure.

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