CURRENT AFFAIRS UPDATE. India to Dominate Global Saving and Investment Along With China: World Bank Report. The World Bank report titled Capital for the Future: Saving and Investment in an Interdependent World released on 3 June 2013 forecasted that India and China will become the largest investors among various developing nations of the world in the year 2030. The report also indicated that both these countries will account for around half the global manufacturing investment. Major points of the World Bank report • The World Bank report indicated that the share of India in global investments would be twice by 2030. However, maximum part of the investment would be from China because the report indicated that India, Russia and Brazil would account for over 13 percent of the global investment in all. This reflected that the share of India in global investment would be less than 13 percent. When the share of India, Russia and Brazil would be combined, it would come out to be more than that of the US. • World Bank Vice-President and chief economist Kaushik Basu explained that the global investment would be dominating area of the developing countries. The largest investors would be India and China. India and China, will have a combined account of 38 percent of global gross investment in 2030. • The share of developing countries in global investment would be tripled by 2030 to three-fifth in comparison to one-fifth of the year 2000. This would bring in a change in the face of global economy. • By 2039, India will reach its maximum ratio of working to non-working age population with 2.2 working person for every non-working one. • In India, the proportion of the population with low or no education would decrease but would still be close to 60%, by 2030. • Strong saving rates in developing nations will rise at the rate of 34 percent of national income in 2014 and will average 32 percent annually until 2030. India, by contributing 7 percent to global savings by 2030, will have around twice its current contribution in less than twenty years. • Development of the financial sector will play a very crucial role in development of India. Increasing consumer demand as well as labour force will contribute significantly in increasing investment opportunities of India. Basis of the Projections • The projections of the World Bank report were done on the basis of two main scenarios. The first one was the gradual convergence scenario. In this scenario, structural factors were assumed to be evolving in the similar fashion like they did in the past. • Second basis of the projections of World Bank was rapid convergence scenario. In this, structural factors were not associated with the historical trends. Instead, they proceeded more rapidly. In case of gradual convergence scenario, share of China would be somewhere around 30 percent in 2030, according to the World Bank report. Over the time period of next 20 years, China’s leadership in the area of global gross capital formation will be supported by the strong economic growth. Everywhere else in developing countries, growth will be the result of high investment rates. The World Bank report also indicated that among the high-income nations, technological advantage as well as strong institutions will reflect fairly stable investment rates. The rate would be 17 percent of the output. The report also indicated that in case of the volumes, the investment in developing countries will reach at around 15 trillion US dollar in comparison to 10 trillion US dollar in high-income countries.
Posted on: Fri, 07 Jun 2013 11:07:34 +0000
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