India desperately looks for large flows of foreign capital, whether for “Make in India” or for growth, languishing at 7 or 7.5 per cent, to spurt to at least 8 to 9 per cent, the average in the years 2007-12. But, investors are yet to be convinced that with all its fundamentals aright, India has still to deliver on promised reforms.

The Prime Minister’s visit to USA was preceded by some sudden movement on the Indian side, such as the 2.5 billion dollar US helicopter purchase deal and action initiated at last to simplify taxation with exemption from MAT for overseas firms not having permanent establishment in India.

US businesses though are well aware of political constraints into which the Modi Government landed itself, to be able to proceed on land or labour reforms in the near future while even the more hopefully looked for GST, path-breaking move, now seemingly destined to defy the April 2016 deadline.

The scheme of national VAT is not fully agreed upon as yet between the Centre and the States, in respect of exemptions and rates of levy, let alone obstruction by the Congress opposition in majority in the Rajya Sabha. But the Government is also finding it difficult to assess the contours of growth with only faint signals of pick-up in activity.

Prime Minister Modi, while enjoying the confidence of top US business and financial chiefs on his reform agenda, had a relatively harder task on this second visit to convince them of his Government’s determination to speed up decision-making, simplifying procedures and giving added thrust to reforms.

At his meeting with heads of financial and business institutions in New York where he arrived on September 24, he heard the CEOs revert to complex regulations, poor infrastructure, tax issues at different levels and bureaucratic resistance. Mr Modi assured them of continuing moves to reduce the role of government in business.

The Prime Minister seemed to have re-established his government’s credentials in amicable interactions and Government expectations are that the detailed plans laid out by the Prime Minister on the massive scale of India’s development efforts, especially in infrastructure, would evoke considerable US investments in the years to come.

Of greater implications for the world economy as a whole is China’s current slowdown – in growth and exports - recurring episodes of stock market turmoils, and the sharp yuan devaluation in August, signaling further market-determined adjustments from time to time and overall raising a spectre of instability for currencies across the world.

Growth has declined to below 7 per cent in the wake of China’s economic shifts and any further setback may trigger another round of financial and economic turbulence extending to advanced economies. All this at a time the global growth has already slowed down to 3 per cent from earlier projections of 3.3 to 3.5 per cent in the early part of the year.

President Xi Jinping’s visit to USA began with a business meet at Seattle, where he unfolded the vision of a China committed to peace and development, devoid of hegemony, and to principles of multilateralism and UN Charter.

President Xi has been seeking to forge a new kind of “great power relations” with United States both of them eschewing military rivalry for “more creative approaches to cooperation on win-win issues”. This was a prelude to his visit to Washington and White House meetings with President Obama.

The Chinese leader was hosted at Seattle by Google’s Sundar Pichai and he met top American CEOs with a market cap estimated at 2.5 trillion dollars. But there is underlying trust deficit in the light of reports of China stealing trade secrets though President Xi used the occasion to deny such allegations and holding China was also a victim of hacking. His country would remain “a staunch defender of cybersecurity” and would not engaged in commercial theft” he averred..

In November, China will take over the leadership of G-20 and as the second largest economy, it is already making efforts to refashion the global economic order and governance. According to a paper detailing China’s progress toward a great power status, President Xi said the economy would stay on a steady course with ‘fairly fast growth’ and currently, it is still operating within a proper range, growing by 7 per cent in the first half of 2015.

Chinese leaders have downplayed international concerns about the course of their economy pointing out that all economies are facing difficulties and are under downward pressure. Such problems in the course of progress must be tackled with coordinated steps to achieve stable growth, deepening reforms and improving livelihood while strengthening and innovating to maintain growth at a “medium-high speed”.

China’s growth estimates have been revised down, and so India’s too, in the latest Asian Development Bank Outlook. China’s growth would be 6.8 per cent in 2015 and 6.7 per cent in 2016 while India is expected to grow 7.4 per cent this year and 7.8 per cent in 2016. India’s growth projections have also been revised down in other forecasts, except IMF which has kept it at 7.5 per cent for both years. The OECD projection is 7.2 per cent and 7.3 per cent in 2016.

These downward revisions underline slower than anticipated recovery in India as well as lack of sufficient progress on the reform agenda including deregulation and on making doing business easier, besides the likely effect of deficient monsoon. India’s growth has also suffered from the sustained fall in exports and it would be difficult to restore the momentum until there is pickup in external demand. That way, it will be a tough fight between China and India to lure US businessmen by projecting the respective markets as attractive. (IPA Service)