India and China a brief comparison

The equity markets will be volatile in the next few years. Especially in the case of India; China has capital control, and still has not managed its currency. India has done it. So India is far more exposed to the sudden ins and outs of capital flows. And that affects the exchange rate of the rupee.

So the Indian equity market could be more volatile than China's. In both, we've seen a little increase in the property markets too, but the increase is a little slower in China compared to India.

Also, from a developer's perspective, the investment in the property market is more debt-driven in India compared to China. But China's urbanisation process is much wider in scope.

For instance, in the last 10 years, most of the urbanisation growth in India has happened in the top five-seven cities. But in the last 10 years, the top four cities in China grew slower than its overall urbanisation growth.

In other words, China's wider urbanisation has allowed its housing market to be more diversified. My worry about the Indian housing market in the short term is that it is highly concentrated in a few cities, and within them in a few neighbourhoods. So the boom-bust theory comes in.

Hence, we should become more mature in our outlook. To sum up, the long-term rise of China and India is gaining traction and is unstoppable. But things could still go wrong.

As an economist, do you think the worst is behind us in global economic recession? Just when there was talk of green shoots, the smaller European countries — Greece, Poland, Ireland, Spain, Italy — are in crisis.

That's why I think the recovery from the global point of view will be volatile and I feel the euro zone this year will be in recession. They have a much, much longer way to go and they will be a drag on the global recovery. So, Asia really has to do a lot and, thus, China-centric kind of recovery is good news and one can thank God for that. But, on the other hand, we are facing another kind of risk. We now have all our eggs in one basket, and China can get it wrong.