For Mr Yen, India is BRIC of choice

Says country will trump them all, including China, in 10 years.

HONG KONG: Japan's former vice-minister of finance for international affairs, Eisuke Sakakibara, who heads the Institute of Indian Economic Studies at Waseda University, says India will become the fastest-growing economy among the four emerging BRIC countries in 10 years, outpacing even China.

In an interview to the Japanese newspaper Daily Yomiuri, Sakakibara, who was known as 'Mr Yen' for his uncanny influence over the Japanese currency's movements during his tenure in the ministry, was quoted as saying he was "almost certain" that India's economy would rocket past China's in the next decade.

He concurs with established opinion that the key driver of India's growth story will be its demographic profile, which has hit a sweet spot.

"Of India's population (of 1 billion plus), 53% or 54% are 25 or younger," Sakakibara notes. "In other words, roughly one out of every four people worldwide in that age group is Indian." The economic output that this huge population bloc will generate in the next few decades as its members reach the prime of their lives, he adds, "will be simply enormous."

That's not to say that the three other BRIC countries - Brazil, Russia and China - won't fare well, he says. "They're all great powers with high economic growth rates," he adds.

China, he notes, is currently perhaps more than 10 years ahead of India in terms of economic development; its growth will benefit Japan and the rest of East Asia. Russia and Brazil too are becoming key players in the world economy with an abundance of natural resources under their control, he says.

"Russia is one of the world's richest in terms of natural resources with its crude oil and natural gas," says 'Mr Yen'. "Brazil too is rich with iron ore and other resources."

But where these two countries falter, he feels, is that they are yet to see the emergence of a significant middle-class population and industrial modernisation on a par with China and India.

In the interview, Sakakibara acknowledges that China and India both have huge income disparities in their societies. "It's true they're the countries with more people in poverty than most other countries in the world, but that's not the end of the story," he says. The number of middle-class people is on the rise in both countries. "At least 200 million to 300 million people in China and 100 million to 150 million people in India are now middle-class, reaching an income level at which they can afford to own cars and live in decent houses," he says. "A huge population is growing into the middle class, and it's through such a process that a period of high economic growth comes about."

He recalled that Japan too went through a similar economic boom from around 1955 through 1970. "The same process is happening in China and India, on an even bigger scale" in terms of population, he says.