India, China in select league, says Reddy

India and China were the only countries among emerging market economies with an investment rate more than 30 per cent of their Gross Domestic Product, Reserve Bank of India Governor Y V Reddy said here today.

However, China's savings rate is above 40 per cent, while India's is in the range of 20 to 30 per cent. Reddy was speaking at an Assocham conference on Emerging Market Economies (EME's).

While lauding their progress, he pointed out that reforms had to be carried out in these economies to ensure that they were fully integrated into the global economy and grew out of EME status.

Conditions were favourable for most EME's like India to integrate with the global economy, including favourable terms of trade and large foreign currency reserves, with reduced external debt as a percentage of GDP, he said. However, one deterrent was the public debt in several EME's, which still remained at high levels.

"Many of the public debts are of longer maturity and considerably higher proportions are in local currency demonstration."

He also warned that EME's with a weak public sector, large current account deficits and less well-anchored inflation expectations might be vulnerable to global changes.

However, the Indian economy was robust enough to absorb the external shocks that might arise out of economic crises.