Hyderabad: India is moving into the 10 per cent GDP growth trajectory and it could be a much bigger story than China in the long run, says Goldman Sachs economist Roopa Purshothaman, who co-authored the groundbreaking study paper 'Dreaming with Brics: The Path to 2050'.

The study gained international attention for its conclusions that predicted a major shift in the global economic balance by 2050 when the Brics (Brazil, India, Russia, China), together could be larger in US dollar terms than the G-6, consisting of the US, Germany, Japan, the UK, France and Italy.

In fact the study became so popular that even some Brics Investment funds were set up and much academic debate was generated as to whether these countries would actually meet the projections made in the report.

Her latest observation, delivered at the just concluded Fourth Pravasi Bharatiya Divas here, is more optimistic than the finding in the study that says that India at a GDP growth rate of 5.5% a year would be the third largest economy in the world and the fastest growing by 2050.

Purushothaman’s study conducted in 2003 was followed up with a piece titled “The Brics and Global Markets: Crude, Cars and Capital” and, more recently, another study, How Solid are the Brics?, which found that the Brics were in the top half of the rankings of the developing economies but further policy improvements were needed in these countries.

The follow-up paper observes that each of the Brics exceeded its growth path in 2004 by at least one percentage point and all but Brazil are expected to do so in 2005 and continue to do so in the next couple of years proving that in the near term the approach is proving conservative.

A conclusion towards this can be drawn from the fact that the Brics have contributed 30% of the global GDP over the past five years, Purushothaman added.

The caveat, however, is that India, when compared with the others in the group, still has a lot of work to do. For instance, education, infrastructure, technology adoption and openness in policy and a precarious fiscal position are some of the soft spots, the young economist who is a graduate from Yale in ethics, politics and economics and international studies and an MSc from the London School of Economics, points out.

As to the question whether India is actually the next China, she felt it was at least 10 to 15 years behind the latter where policy reform was concerned.

But similarities between the two persist that might encourage one to draw a conclusion that India might actually make the grade. Its impressive growth in the last 10 years, its massive labour force and the strong participation by its diaspora in its economic development, are some similarities.

However, the heavy services tilt instead of manufacturing focus as in the case of China, and the different approaches to investment apart from the contrasting political structure were the major divergences, the vice president and global economist at the investment banking multinational, said.

Encouraging however on the ground there has been a consensus on the irreversibility of reforms and private sector participation in economic development which is a major plus for India, she felt.

Going beyond the Brics, Goldman Sachs has conducted a follow-up study to the 2003 paper that looks at the next rung of emerging economies and identifies the N-11, or the next 11 countries, that the fit the bill, Purushothaman said.

However, of these only Mexico and perhaps Korea have the capacity to become as important globally as the Brics. But at the same time it would be interesting to watch Iran, which shows the potential, she added. Other countries studied in this group include Indonesia, Philippines, Pakistan, Egypt and Turkey among others.

In a bid to rank countries by their abilities to meet growth potential, the second study also developed a Growth Environment Score (GES), using 13 basic indices in five broad areas such as macroeconomic stability and conditions, technological capabilities, human capital and political conditions.

Asked if the N-11 projections warranted a revisiting of the findings of the first study, Purushothaman told DNA Money there was not much of an impact on the earlier projections and all the Brics were quite well placed on the GES scores.

However, a review of the Brics study was a frequent feature and both the GES scores and the major conclusions would be revisited periodically she added.