'India to surpass China despite synchronized business models'

India's growth rate is projected to surpass China's on account of policy reforms and improved macroeconomic environment despite highly synchronized business models between them, a business chamber analysis has said.

PHD Chamber of Commerce and Industry's analysis "India's business cycles well synchronized with China" notes that India's macroeconomic environment improved on account of central and state governments' liberalisation of labour and environmental regulations, coupled with generous reforms and new incentives for investment.

According to the analysis released on Saturday, business cycles convergence between the Asian giants has increased significantly with bilateral correlations of India's inter-linkages with China observed at its highest of 0.78 during 1996 - 2014 period, followed by Brazil at 0.65.

Bilateral correlation between India and Indonesia is at a low of 0.22 and negative with Russia (-0.01) and US (-0.06), the analysis said.

"Given the fact that both India and China did not experience a recession, but a milder counterpart called a slowdown, thereby making the two economies more synchronized. Further, the proximity between the two nations and the trade relations add to the complementarities," said the analysis.

Domestic demand and saving and investment rates helped India's growth to remain steady, putting the Indian economy on the path to recovery with modest economic growth and setting the stage for the anticipated surpassing of China.

Despite the Indian economy not being export driven, growth has also been fuelled by recovery in investment, reduced policy uncertainty and resilient consumer spending, the analysis said.