Is India the New China? Or a `Brown Paper Bag'?: Andy Mukherjee
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``Is India the new China?'' Laura Wallace, the interviewer for IMF Survey, an in-house publication, asked Burton.
Yesterday, it became a prescient question, as an Indian government report showed that the $547 billion economy grew 10.4 percent from a year earlier in three months to Dec. 31. Not only was it the fastest rate on record for India, it beat China's growth in any quarter over the past eight years.
Thus, India became the world's fastest-growing major economy. Simultaneously, the Indian rupee rose to its highest in four years against the U.S. dollar, making a lot of imported goods that were outside the reach for a majority of the country's 1 billion people suddenly look cheaper.
What does it mean for the rest of the world?
Ask miners and farmers from Australia and Indonesia to Brazil and South Africa. Economic activity in China has pulled up global prices of commodities ranging from soybeans and aluminum to cement and steel. Now imagine India, which has the only other billion- people economy in the world, beginning to enjoy the same kind of clout in the global economy as China. Demand for commodities will go through the roof.
A caveat is needed here, and IMF's Burton supplies it.
``India is definitely emerging as a force in its own right,'' Burton, director of the lender's Asia-Pacific operations, told Wallace. ``But India isn't as open as China, which probably holds it back and keeps it from having as big an impact on the global economy.''
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