|Rediff India Abroad Home | All the sections|
India, China in select league, says RBI Governor
November 04, 2006 03:35 IST
India and China were the only countries among emerging market economies with an investment rate more than 30 percent of their Gross Domestic Product, Reserve Bank of India Governor Y V Reddy said in New Delhi on Friday.
However, China's savings rate is above 40 percent, while India's is in the range of 20 to 30 percent. Reddy was speaking at an Assocham conference on Emerging Market Economies.
While lauding their progress, he pointed out that reforms had to be carried out in these economies to ensure that they were fully integrated into the global economy and grew out of EME status.
Conditions were favourable for most EMEs like India to integrate with the global economy, including favourable terms of trade and large foreign currency reserves, with reduced external debt as a percentage of GDP, he said. However, one deterrent was the public debt in several EMEs, which still remained at high levels.
"Many of the public debts are of longer maturity and considerably higher proportions are in local currency demonstration."
He also warned that EMEs with a weak public sector, large current account deficits and less well-anchored inflation expectations might be vulnerable to global changes.
However, the Indian economy was robust enough to absorb the external shocks that might arise out of economic crises.