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Monday, Aug 04, 2003

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`Make NRIs partners in national growth'

Vinson Kurian

Thiruvananthapuram , Aug. 3

GOING by India's economic reforms programme, strong economic fundamentals and its achievements, it can be expected to outgrow China in a few years' time, according to Dr Thomas Abraham, President, Global Organisation of People of Indian Origin (Gopio), a non-profit community organisation for people of Indian origin.

The Indian Diaspora's emotional determination can help India become a developed nation by 2020, Dr Abraham, who is based in Stamford, Connecticut, said.

When India faced its worst balance of payments crisis in the early nineties, it was NRI deposits that helped it emerge out of the crisis. This was the first time the important role the Diaspora became increasingly relevant in building/ mending the homeland economy. Again, in 1998, when the country conducted nuclear tests, the Diaspora stood by India and played a critical role in influencing policy makers in the US against sanctions-led sentiments.

Although official FDI figures point to $47-billion worth of investment flowing into China in 2001 against $3 billion to India, the race could be actually much more closer. For, according to the International Finance Corporation, the Chinese FDI figures could well have been overestimated due to round-tripping when mainland funds leaving the shores return as foreign investment to gain tax and other incentives.

Dr Abraham also quoted World Bank statistics, according to which as much as 50 per cent of China's FDI could actually be domestic cash, cutting down its 2001 total to merely about two per cent of the GDP. According to IFC, India, on the other hand, tends to underestimate FDI because of incomplete data and might just have received up to $8 billion during 2001 or 1.7 per cent of the GDP. Venture capitalists are leading the way investing serious money in India as against in much-hyped China.

The market capitalisation of the Indian software industry has climbed steeply from $4 billion in 1999 to about $50 billion today. India's software exports are about $10 billion. It also has a resource pool of 3.5 lakh highly trained software professionals compared with an estimated 30,000-35,000 in China, Dr Abraham said.

China and India have pursued radically different development strategies. India is not outperforming China overall, but is doing better in certain key areas. That success may enable it to catch up with and perhaps even overtake its neighbour. Should that prove to be the case, it would not only have demonstrated the value of homegrown entrepreneurship over long-term economic development but would also determine the limits of the FDI-led growth approach that China is pursuing.

India may well have paid an economic price for democracy and may continue to do so for some time, but that is the only political system that would still define Indian Republic. India is India because it is a pluralistic, secular democracy, Dr Abraham said.

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