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Investment
in infrastructure financed by domestic savings is
key to China’s economic growth
Government investment
in infrastructure financed by high level of domestic savings is
at the root of the China Miracle. China has shown the way on how
the effective utilization of working population can help to spur
domestic savings which translate into investments in infrastructure,
said Mr.N.K.Singh, Chairman, Management Development Institute &
Former Member Planning Commission, while speaking at a conference
titled “The China Miracle” organized jointly by the Confederation
of Indian Industry (CII) and the Department of Industrial Policy
and Promotion, Ministry of Commerce & Industry, Government of
India, in New Delhi today.
Only 10% of China’s investment in
infrastructure is financed by Foreign Direct Investment, while India
is focusing on attracting FDI and private investment for this purpose.
India’s domestic savings are 25% whereas China’s domestic savings
are 40%.
Private investment in infrastructure
projects is not going to work because the gestation period of such
projects is very high, believes Mr. Chetan Ahya, Co-Author, Morgan
Stanley Report on India China. Creating job opportunities for the
working population leading to increased domestic savings will generate
the necessary funds for investment in infrastructure, he feels.
While detailing the reasons for China’s
faster growth Mr. Martin Fish, Chief Executive, China, Standard
Chartered Bank, Shanghai said “Human capital and infrastructure
are two important factors for economic growth. China has had an
open policy towards these two important factors. China is not a
miracle but has been built on a well thought out process over the
last 25 years.”
“One of the major reasons for stagnation
in India’s savings rate despite an improving age dependency is the
government’s dis-saving. A policy change targeting a turnaround
in public savings and allocation of resources targeting creation
of productive employment opportunities are critical to improving
overall savings” said Mr. Peter A Borger, Executive Vice President
and Member of the Management Board, Siemens Ltd, China Region East
The panelists agreed that India’s
strong institutional framework in legal, banking and financial sectors,
and an independent media combined with its tertiary education strengths
would be an advantage in the coming years.
Speaking at a session on “ICT - Can
the Two Complement Each Other”, panelists agreed that India’s skills
in Software development and China’s skills in hardware manufacture
offers large opportunities for co-operation and collaboration.
March 24, 2005
New Delhi
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