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India, China, Russia are new engines of economic growth

India, along with China and Russia, is the world's engine of economic growth, not the US, Europe or Japan which are in recession, a report on global economy said.

"Once synonymous with failed socialism," the report said, "three unlikely engines are powering the global economy. They are Russia, China and India. No kidding."

Indicating the jolt to conventional thinking, the headline read 'Power to the Poor'.

In India last spring, all quotas on imported goods were abolished, and citizens are now free to buy as many new foreign watches, T-shirts or luxury cars as they can afford.

Even a year ago, the Newsweek report said, few would have dreamt that India, China and Russia would emerge as global economic locomotives.

"They are still big, bulky states, still shaking off the torpor of fading socialist dreams, and a bit behind the times in a triumphantly capitalist era. But look at the numbers now, it said, production of goods and services is expanding at 7.5 per cent in China, 5.5 per cent in Russia and 4.5 per cent in India this year."

"Were it not for China, India and Russia, which account for two-fifth of the world population and one-fifth of its output, global output would likely be shrinking instead of rising by maybe 1 per cent this year."

"It' s a topsy-turvy world, isn't it?' said William Kline, Research Director of the Institute of International Finance in Washington. "But there it is. They are the leaders now."

From its independence in 1948 until 1991, it says, "India was almost as committed to Marxist economics as China. Then, in part out of envy of China's boom, India embraced free-market reform. Growth rates jumped from 1 or 2 per cent in the late 1980s to more than 7 per cent in the mid-1990s before the impetus seemed to fade."

"The 4.5 per cent expansion expected this year is actually a serious comedown. The government is now debating a new round of liberalisation, from legalising layoffs to lifting controls on foreign direct investment."

India, Russia and China are "in control of their destinies. They participate vigorously in world trade, although Russia less than others. They, in fact and theory (theory for the most part in Russia's and India's cases) are open to foreign investment.

"Their cultures cherish education, hard work and at least the goal of honesty in business and government - qualities essential for rapid economic growth."

"China makes sophisticated, high-tech goods so cheap that others are scrambling to keep pace. In Russia, the latest sign of capitalist horsepower is a new law that allows businessmen to gain legal title to their own offices, stores or factories for the first time since 1917," the report said.

"However, the three countries still have massive problems, starting with banks that are broke by conventional accounting standards. India and China both have major budget shortfalls."

"Russia and India still have limited exports, and in the post-war era no nation has achieved prosperity without becoming an export powerhouse. But for the next several years, China, India and Russia still have large, untapped domestic markets in which to grow."

"These big, backward states, once part of the problem, are now part of the solution to growth in global economy."

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