NEW DELHI - India will emerge as the fourth strongest economy among the G-20 countries after China, Russia and S Korea from the global crisis, given its robust forex reserves, high GDP growth rate and various fiscal and monetary measures taken to tackle the downturn, a study said.
Developed economies like the US, UK and Japan would fare relatively bad in terms of their emergence from the crisis with a ranking of 11th, 12th and 13th respectively, Assocham said in its study titled ‘India & G20: Economic fundamentals amid global recession.’
The study considered seven economic indicators relating to size of the economy, spending power, tax structure, interest rate policy, budget balances, debt burden and foreign exchange reserves.
“India, along with China, Russia and South Korea would emerge stronger out of the current crisis as they enjoy strong economic foundations based on foreign exchange reserves, higher growth rates in GDP per capita and sound monetary policy measures,” the chamber said.
India ranked last (19th) in terms of budget balance as a percentage of GDP and 12th in terms of public debt as a percentage of GDP, it said, adding that low ranking on these indicators gives the country key challenges to announce heavy fiscal stimulus package, it said.
In terms of foreign exchange reserves that provide a cushion to protect an economy from speculative capital movements, India is placed at fourth position preceded by Russia, Japan and China, it said.
The G-20 members are the finance ministers and central bank governors of 19 countries, including Argentina, Australia, Brazil, China, France, Germany, India, Japan, Russia, South Africa, South Korea, the UK and US.
The country has made significant reduction in the key rates like cash reserve ratio (4 per cent) as well as the repo rate (3.5 per cent) in the last three months. Measures of such magnitude places India on the second position in terms of the monetary policy stance, Assocham said.
Among the advanced economies, Japan is likely to witness the maximum contraction in total domestic demand followed by the US, Italy, Germany and UK, it said.
Source : India Journal