India and China account for much of the economic growth in the world. But Nouriel Roubini warns that 6 percent growth is too low for India. He would like to see growth in the 7 to 8 percent range.

As it is, while China has an overabundance of infrastructure, Roubini believes that India needs much more infrastructure. On the positive side, this means India could grow faster than China over the next few years.

Emerging markets are going to drive world growth, and while China exports, the economist believes that the nations of India, Indonesia, Brazil and Turkey can grow faster due to preexisting homegrown domestic demand.

China has had difficulty transitioning to a consumer based economy, but less so for the other EM nations.

India faces infrastructure challenges, with low marks for roads, electricity and total infrastructures compared to many nations in the world. India also has the disadvantage of having to pay for most of its petroleum needs. The nation faces a difficult situation where it really needs to raise rates and lower rates at the same time. It needs to raise rates to fight inflation and lower rates to spur growth. Roubini pointed out the dilemma.

India has major problems on top of infrastructure. It has a low per capita standard of living, but with a billion plus people, the economy is large as a whole. Its credit rating is low, BBB-, yet better than the previous BB+ seen in the past. Fitch rates the nation as stable. Reporting on Fitch, the India Times said:

The agency sees a growth of 6.8 percent in the fiscal year ending March 2020 (FY20) and 7.1 percent in FY21, supported by accommodative monetary policy, an easing of bank regulations, and government spending. 

Apparently there is some dispute about just how fast India is growing and will grow, as the Asian Development Bank puts 2019-2020 growth at 7.2 percent. That bank mentioned improvements in government policy to spur investment should lead to robust growth:

India will remain one of the fastest-growing major economies in the world this year given strong household spending and corporate fundamentals

An increasing export effort, coupled with strong consumer spending, should make India's growth strong, but as we see there are disagreements with that view. Roubini certainly is talking in the range of 6 to 7 percent. And with 4 percent inflation, that growth number will need to improve.

It was reported that:

A group of over 100 economists had gone public with their reservations on the GDP and other key dataprints last month in the light of the frequent revisions in the way the numbers are computed. 

Roubini had said to Rediff that stagflation was not yet an issue, though it could become a concern. But foreign investment appears to be strong, so India has a foundation of solid growth as long as that investment continues.

Asia Fusion

I had previously reported here and here that India and Asia in general had attempted a reconciliation with the world's developed economies taking notice. Of course, the serious spat with Pakistan set that back. If that can be mitigated, the entire region would benefit. 

The nations are far from forming an economic union, as has been contemplated, but the Belt and Road Initiative could offer the fusion that would make the area stronger economically. India is torn between supporting the Belt and Road and increasing its ties to the west. 

Certainly, the question is, would China measure up to the leadership role needed to bring a better standard of living to the area or not? Quartz India tells of this G-20 example of the tension India feels: 

Prime minister Modi was first photographed posing with president Donald Trump and prime minister Shinzo Abe during a trilateral meeting most openly concerned with China’s economic and military rise. Hours later, however, Modi had joined president Vladimir Putin and president Xi in a second trilateral. This one could be summarily described as being aimed at the global order led by the United States and its allies. The second trilateral meeting was defined as a counterpoise to the first, and Modi managed to attend both. Shaking hands and smiling with Trump first and with Xi later.

As indicated at the beginning of this article, India's infrastructure is lacking. The United States is unlikely to come to the aid of India. The United States has a poor record in Latin America, Africa and Asia when it comes to helping with infrastructure. China may be up to the task, and India would need that boost desperately. 

US consumers show a willingness to buy things Asian. But the United States is so wrapped up in its military prowess that it has lost a unique opportunity to bring the world together and in the process forge alliances with a vast majority of nations. Just giving foreign aid is quite different than really helping nations succeed. 

But the truth is, India is not western, nor is it close to China. And indecision will only set the people of India back. It needs to proceed on both levels, because that will help the nation prosper in the future. Yes there is risk, and India is hesitant to trust tariff man, or China But it may not always be that way. A return to free trade will increase world prosperity. 

Quartz India further analyses:

While in a Western-led order India cannot expect to enjoy more than a secondary role, China’s rise offers the exciting possibility of a genuinely multipolar—rather than merely multilateral—world where India can legitimately expect to become an autonomous centre of geopolitical power. In this scenario, global power would be shared between four or five major powers: America, Europe, Russia, China and, presumably, India. 

With over a billion people, and fast headed towards being the largest nation in the world, Indian leaders really have to take action and assume a leadership role in world affairs and economic growth.