Can India's Economic Growth exceed china's in next 5 years?

With the expectation of nine percent plus growth in the next two years, Chief Economic Advisor in the Finance Ministry, Kaushik Basu believes that India can overtake China with a double-digit growth in the next 4-5 years.

Basu is the latest addition to Finance Minister Pranab Mukherjee's budget-making team. He does not see the RBI tightening money policy needed to check inflation. Food inflation touched 19.80 percent last week, fuelling expectations that the Reserve Bank of India (RBI) may tighten money supply in its quarterly review on January 29. "There is no expectation of monetary tightening, nor do I believe there is a reason for it. It (inflation) shouldn't have an adverse effect across the board. It is a very sector-specific inflation, which is taking place and this needs sector-specific solution," said Basu.The reason for Basu's optimistic view about India's growth is India's high savings and investment rate. Basu feels, "India's pace of economic growth could exceed that of China's in the next four to five years. A double-digit growth is within the realms of possibility. Once you have achieved a rate of 38 percent, there is no way it is going to be beaten down to 30 percent. It could fluctuate, at the most, by a couple of percentage points. But a 40 percent savings rate would fuel the economy further." He credited bank nationalization, liberalization of the economy in the 1990s for the healthy growth rates.