The Indian economy is going through a sluggish period but has great potential for the future, a Chinese economist has said, adding a word of caution that the growth will not be in the same bracket as that of the last decade.
Professor Wen Fude, economist and vice-president of the Chinese Society for South Asian Studies at Sichuan University, has been following the Indian economy for the past three decades and has written several books on it.
He does not subscribe to the doomsday picture painted by some international agencies and western scholars about the currently faltering Indian economy’s future outlook.
"When the Indian economy was growing fast in the early and mid 2000s, many western economists said by 2015 India would overtake China and compete with the US. Now, they are not giving India any chance," Wen told HT at his office in the university's Institute of South Asian Studies.
"India's economic growth may find it difficult to gain new momentum in the short term but still has credible potential in the long term," Wen wrote in the Institute’s journal.
Wen has detailed five factors that will help India grow in the future: abundant natural resources like minerals, huge labour resources, a robust science and technology sector, huge market for consumer and capital goods and a good economic system.
"For example, India has been feeding its huge population for years. That has been a great contribution (to the world of emerging economies)," Wen said.
Talking about India’s market for capital goods, Wen said there is huge demand in developing infrastructure in the railways, energy, power and manufacturing sectors.
"India requires a lot of equipment to change from the 'mill technology' concept to becoming a manufacturing power house," he said.
Keeping these factors in mind, Wen forecasts that in the next 10 to 15 years India's economy will neither grow too fast nor too slow.
"India is likely to grow at a rate between 4.5% and 6%. I don't think it is possible for India's growth rate to fall below that. At the same time, India will not be able to grow like it did a few years earlier at 8% and 9%," Wen said.
One major stumbling block for India is the country’s dependence on the service sector, Wen feels.
"It will be difficult for the country to change this economic structure overnight especially because the manufacturing sector is weak," he said.
Wen also said that India might not have a strong central government in the next decade.
"It is a political problem (and) not necessarily with the system (of democracy). Half the people in India do not seem to like (Narendra) Modi and half do not like Rahul Gandhi," Wen said about the two high-profile Indian politicians.