Chinese investment can be important source of capital: Axis Bank economist

Neelkanth Mishra, the chief economist of Axis Bank, who is also a member of the Economic Advisory Council to the Prime Minister, on Friday advocated India to tap more in investments from China.

Comparing the situation with Japan of the 1980s, Mishra said India's northern neighbour will be "spewing out" a lot of capital given the very low yield of 1 per cent on government bonds and a negative foreign direct investment.

Mishra, a part-time member of the EACPM, acknowledged the sensitivities involved given the frosty ties between India and its northern neighbour, and also pointed to the "Press Note 3" of 2020 attempting to restrict flows from China.

"...if there are funds, and we already have like China Light and Power owns power plants in India. So it's not that we haven't seen that, but (Chinese) can be a very important source of capital," Mishra said while speaking at a conference organised by the Sebi-promoted NISM here.

Drawing parallels with Japan, Mishra said in the 1980s, Japan was being blamed for being too aggressive and concerns were also being raised about the country taking away jobs.

Japan was investing in markets such as Mexico, Thailand, and India then, Mishra said, adding that Maruti Suzuki happened at the same time.

"As we think about a much more competitive world in terms of capital flows and tight financial conditions, I think these kind of parallel structures (like investments from China) will actually help us navigate," Mishra said.

Mishra said countries tend to slow down the economy in times when the currency is under pressure but advocated against India adopting such a stance.