INDIA FUTURE DRIVER FOR BRIC ECONOMIES: GOLDMAN SACHS

Financial Times, March 2, 2005

India has the potential to become the main driver for economic growth of
the BRIC (Brazil, Russia, India and China) countries, said Goldman Sachs
Managing Director, Ketan J. Patel, here on Tuesday.

Speaking at a Nasscom CEO Forum meeting on "Challenges for India in
establishing a global hub", Mr. Patel said that at present China was the
main economic driver for the four "high potential" economies of BRIC which
together have the potential to overtake the advanced G-6 countries by 2040.

He identified six main issues which were relevant in deciding whether
India achieves its true potential. These are Government policies at the
federal and local levels, maturity of capital markets and venture capital,
support for investors, development of infrastructure, size and quality of
talented workforce and focus on export markets.

At present, India scored only two out of six on this list, he said
identifying talented workforce and focus on exports as strengths. "If
India can do so much with just two out of six, imagine what can be
achieved with six out of six," he said.

He argued that China was "redefining the capitalist model" where economic
growth was being sustained under State intervention and control without
entrepreneurs or free market competition. "This is the biggest experiment
with building capitalism in the history of the world," he said and pointed
out, "We (India) have paid the price for democracy. How long do we
continue paying this price?"

Economic cooperation between India and China was the way ahead for both
countries. The capitalist world had grown from about a billion people to
more than six billion in the last 15 years and these two countries were
ready to take full advantage of this, said Scott B. Kapnick, Managing
Director, Goldman Sachs. For that there was need for greater flexibility
of labour and more freedom for capital in India. "Unless you do that the
smartest money will not be able to find the smartest ideas to foster and
India will be stuck in the slow growth trajectory".