Over the past six years, Stephen S. Roach, Chief Economist, Morgan Stanley, has made all of 25 visits to China. Last fortnight, Roach made his first trip to India. Business Today's Brian Carvalho caught up with him on a 40-minute drive from the Mumbai domestic airport to the Dhirubhai Ambani Knowledge Centre on the city's outskirts. Excerpts:

On whether US-centric global growth is sustainable.

The US economy accounted for 96 per cent of the cumulative increase in world GDP between 1995 and 2002. Such an unbalanced global economy is not sustainable. I don't see Europe making a significant contribution. The recovery in Japan is tenuous. This is the time when China and India can step up on the supply side of the global economy.

On whether the US dollar needs to further fall to correct this imbalance in growth

The dollar needs to come down a lot more. So far it's down 13 per cent, which isn't enough when the current-account shortfall is a record 5 per cent of GDP. In the mid-eighties, when the US current account deficit hit a then record 3.6 per cent of GDP, the dollar came down 27 per cent.

On whether China is largely responsible for the huge US trade deficit

The problem in the US is a jobless recovery and a huge trade deficit. The record deficit cannot be blamed on Chinese competition, but on the net national saving rate falling to less than 1 per cent of GDP in 2003, which means that the US has to attract surplus savings from abroad to finance its consumption-led growth. If China is made the scapegoat, and we decide to open up our trade deficit to somebody else, we will only be expanding trade with higher-cost producers, and that would be a tax on the American public.

On his observations of India.

There's no mistaking the lagging infrastructure, which is because India's foreign direct investment of $4 billion pales in comparison to China's. But the good news is that India can still deliver on services, because you don't need infrastructure but connectivity and highly skilled people. (But) India has a fully functional financial system, which China does not.

UP AND AWAY
Inflation Watch: What Could Soon Be Dearer?

Petrol and diesel
Saudi Arabia, the biggest producer of crude, and OPEC has decided to cut production

Engineering and transport equipment
The price of nickel (and steel), both key inputs for such equipment, has increased substantially

Cars and auto components
The price of steel has increased substantially

Housing Loans
Interest rates, which had bottomed out, could soon firm up.

-compiled by Ashish Gupta

SELF WORTH
Quietly Waits The Don
It now looks like this IIM-B professor will have to wait till the next elections.

Don Gowda: He will have to be content with a back-room role this time

Even in the grey-cell heavy corridors of the Indian Institute of Management, Bangalore's verdant campus, Mothakapalli Venkatappa Rajeev Gowda has enough going for him to stand out. That's saying something. The institute's incumbent Head P.G. Apte is one of the world's foremost experts on derivatives and its previous one M. Ram Mohan Rao a legend of sorts among mathematicians everywhere. So, the 40-year-old Gowda, a PhD from Wharton and post-doctoral Fellow at the University of California, Berkeley, who is now Associate Professor, Economics and Social Science at the B-school, must be special. That's borne out by the fact that the man was Runner Up, Mastermind India 2002, the Indian edition of BBC's renowned black-chair quiz. For the record, Gowda's choice of special topics-participants answer two-minutes worth of questions on the special topics and a further two minutes on assorted ones in each round-in the three rounds were American Politics in the Reagan years, the Rashtrakuta Empire, and the plays of Girish Karnad.

All of this constitutes reason enough for the good professor to be a celebrity on campus. That, though, doesn't explain his presence in this magazine, which isn't particularly known for featuring campus celebs, however photogenic they may be. To understand that you will have to meet the other Rajeev Gowda attired in crisp starched khadi, son of M.V. Venkatappa, the Chairman of Karnataka's legislative council, and a politico with affiliation to the Indian National Congress who, alas, hasn't been allowed to contest the coming elections to India's Lower House of Parliament from the prestigious Bangalore South borough.

Gowda is, if you will pardon the epigram, a born politician. "My earliest memory is of presenting a bouquet to Indira Gandhi when I was six years old," he says referring to India's former prime minister. "My house used to be filled with leading politicians and I have always been interested in public service," he adds, qualifying that this entails an entry into active politics. And so, after his PhD, post-doctoral qualification, and a eight-year stint teaching political science at the University of Oklahoma, Gowda returned to India in 2000 with a desire "to serve the people of my country". It was 15 years since he had left India and his credentials made him a Don, but politics was where his heart lay.

His background as an economist, he explains, will help him "provide real solutions to real problems" and his stint in academia has rendered his family "financially stable". For some time, it looked like the professor was headed for Parliament. Congress President Sonia Gandhi inducted him into the party's economic think tank and there has been some noise about Gowda heading the Congress Leadership Institute, a still-on-paper executive education provider to politicos. He was busy planning his campaign when news that he wouldn't be asked to contest the polls trickled in. Still, age, intelligence, and caste (like Karnataka's Chief Minister S.M. Krishna, he belongs to the powerful Vokkalinga community) are on his side. Next time, sir.

-Venkatesha Babu

DEAL BUZZ
Jerry Makes His Move

Hello, Goodbye?: No. Rao (right) will retain Koppar as part of his A-team

It's a homecoming for me," grinned Anant Koppar, as he posed for photographs soon after he, CEO of Kshema Technologies, and Jaithirth "Jerry" Rao, Chairman and CEO of Mphasis BFL, announced a deal to merge the two companies. Koppar, who worked for

BFL between 1990 and 1997, struck the deal for $21 million (Rs 92 crore). Kshema will be renamed Mphasis Technologies and Koppar will be the President of the new unit. It's a win-win deal: Kshema gets a big parent, and Mphasis, scale. Its embedded software business now doubles in size to $30 million (Rs 132 crore).

-Venkatesha Babu

ON THE ROAD DEPARTMENT
Risen Like A Phoenix
From the ashes of textile mills rises a sprawling shopping mall.

High Street Phoenix: Shoppers walk where mill workers once toiled

Retail guru Paco Underhill would probably make sense of it. I could not. Why hundreds would brave the sweltering sun on a leisurely Saturday afternoon to throng a shopping mall? Yet the draw was unmistakable. Just one look at the sea of humanity washing over Mumbai's latest consumer oasis-the 500,000-sq-ft Phoenix Mills' shopping complex-and I was convinced.

Some stood in bunches surveying the sleek glass and chrome facades; Pantaloon, Big Bazaar, McDonald's, Barista....Others parked themselves on the awning-shaded benches, lorded over by a white looming chimney-the solitary relic from the complex's cotton mill days. Inside, along aisles and aisles of shrink-wrapped produce and merchandise, afternoon shoppers were shopping gleefully to the tune of remixed Hindi pop music, navigating by signages promising bigger packs, better quality and the cheapest prices. "This is just the beginning, a lot more is on the way," promises Atul Ruia, Director, Phoenix Mills, which boasts of everything from departmental stores to restaurants to bowling alleys.

Amongst the commercial and the prosaic, I manage to unearth something quaint. Sweet World, a candy store, which has 108 varieties on offer, all specially imported. Is that a good thing? I wonder. A ginger-haired girl, ardently clutching her Lonely Planet, answers it for me. "It's too westernised. This is not what I expected. You could be anywhere in the world."

-Abir Pal