By Aaron Chaze
|Surging ahead: India is set to outstrip China's growth|
According to the Global Development Finance Report released recently by the World Bank, India is expected to be the fastest-growing economy in 2010, with 8% year-on-year GDP growth. The bank estimates China's 2010 GDP growth rate will be slightly less, at 7.7% year-on-year. The World Bank has also raised its estimate of India's GDP growth rate this year to 5.1% from 4%. Even at the higher level, that will be the slowest growth rate in six years. However, China and India are still in a different league than most other countries, which the World Bank predicts will see their economies shrink this year.
With the new government in place following the national elections in May 2009, additional reforms are expected in the financial sector, especially in banks, pension funds and the insurance sector. The International Monetary Fund (IMF) has weighed in, saying that mandatory investment norms for Indian banks that force the purchase of central and state government securities should be scrapped. At present Indian banks are required to park 24% of their deposits in government securities, also known as the statutory liquidity ratio (SLR).
Indian companies have continued to make investments and create jobs in the domestic market throughout the recent slowdown, and apparently they have continued to do so in other markets, too. According to 2009 UK inward FDI data, Indian companies' investment was the second-highest foreign job creator in the United Kingdom during 2008-2009. Indian companies created 4,149 jobs in the UK in 108 new projects, out of a total of 35,000 jobs created in the UK by foreign companies. Job creation by Indian companies in the UK is a recent phenomenon, growing from a base of 892 jobs in 2003-2004 to a cumulative total of 37,664 jobs created by 2008-2009. Most of the Indian investments in the UK are in IT, life sciences and advanced engineering.