For the first time in more than 15 years, India’s economy is growing faster than China’s. At least that was the case for 2015; according to government figures released Monday. But there’s more to this story, and HPR’s Bill Dorman has it in today’s Asia Minute.
India’s economy grew 7.5% last year…faster than China’s growth rate of 6.9%. But there’s a cautious reaction in some quarters. Last year, India’s statistics ministry revised some of its measurements, and skeptical economists say it may overstate the case for growth.
India’s exports and a few other indicators have been weaker in recent months, but compared to China and certain other regional economies, India is still doing relatively well. India imports more of its energy than China does, so a drop in prices has helped the Indian economy. But India’s stock market remains underwhelmed. The benchmark Sensex Index is down about 13% from a year ago—slightly worse than the Shanghai Composite’s performance over the same period.
The next message for the markets is likely to come not from economics, but from politics. The prospect of government reforms drove the Indian stock market nearly 20% higher within the first year of Narendra Modi’s term as prime minister, which started in May 2014.
But since then, Modi’s ruling party has faced a legislative standoff with the opposition about those reforms…a situation likely to continue when parliament reconvenes in two weeks. Today, the Sensex Index is within 2% of where it was the day Modi took office.