Finance minister P Chidambaram said India and China will drive global growth in the years to come with the growth rate in India projected to be upto 6.7% between 2013 and 2014.
"Going forward, China and India will continue to be drivers of world growth, with China growing at 8-8.5% and India at 6.1-6.7% between 2013 and 2014," he said, while addressing students and faculty of Harvard University on 'The Rise of the East Implications for the Global Economy'.
Chidambaram, who is in the US to meet investors and sell India's growth story, acknowledged that there is "potential for tension" within the countries of the East as they compete for resources and markets.
"In recent months we have seen talk of conflict over islands, underwater resources, or even water itself. We need to work collectively to reduce these tensions and to ensure that trade, investment, and mutual gain trumps narrow self interest," Chidambaram said in his address yesterday.
The economic slowdown in recent years has forced the world to adjust and industrial countries would now have to save more while emerging markets need to spend more, he said.
"Such an adjustment will help industrial countries pay down heavy debt loads, even while leaving global demand to be supported by the emerging markets. Of course, the nature of spending will vary across emerging markets. China probably has to consume more, while India has to invest more," he noted.
While China's investment story has been much commented upon, "India's is just starting out," he said.
Chidambaram noted that while India saves a lot, its savings fall short of its investment needs.
India's savings rate at its lowest in recent years was about 30% of GDP.
"India needs intelligent risk capital that will ensure that investments are monitored and brought to fruition. And India needs long term patient capital that is willing to collect a return over many years," he said.