The Hindu Business Line : `India doing well; recovery must be broad-based'

THE general economic outlook for India appears excellent - both in 2004 and in the long term, but will be mixed in the medium term, according to Mr Ashok T. Aram, Managing Director, Deutsche Bank AG.

In an informal chat with Business Line Mr Aram said, "Even from a global perspective, the medium-term outlook is not as positive as is expected to be in the long term."

"Over the past year, not a single board meeting of the bank was complete without bringing up China on the agenda." He recalled the country's consistent growth in the last 10 years and stated, "None could beat China, especially in the dynamics of manufacturing. The country has recorded 9 per cent growth," he said.

Comparing the two economies, he said both India and China recorded tremendous productivity gains in the last couple of years in various sectors including health care, but for India it was a `jobless recovery'.

"Such a recovery is not good in the long-term. Though the trends are positive in the service sector, there is a need to maintain a balance between agriculture, manufacturing and services," he said.

Referring to the US, he said, "Massive cost-cutting exercise and balance sheet clean-up in the last two years had brought about excellent results. The economy has registered a 4.8 per cent growth during the last quarter, which is presumably the highest in the last 36 months. If the prospects for the largest economy are good, then it is good for all."

Reverting to the second largest economy in the world - Japan - in the Asian time zone, he said, "For the first time in the last decade, Japan bottomed out. But 2004 looks good. While the industrial recovery is obvious, the financial system in Japan is awful. It is exposed to high risk. Huge non-performing assets are being cleaned up with the taxpayers' money, the banking sector continues to remain weak; but there can be no turnaround overnight."

On Germany, he said that the country went through an absolute recession in 2003 but hoped to achieve a moderate growth in 2004. "If the US and Japan do well, Germany will follow suit," he added.

According to him, 2004 would be a year of restructuring for Germany (the largest economy in the European time zone), of its pension fund and health care systems. "Though a lot of structural issues will have to be looked into, the outlook for the short-term is positive," he added.

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