India and China together account for 40 per cent of the world’s population, 9 per cent of the world’s gross domestic product (GDP) at market exchange rates and 16 per cent of the world’s GDP in purchasing power parity (PPP) terms. Moreover, by November 2009, India and China had a 3.3 per cent weightage in the global equity index.

As per current International Monetary Fund (IMF) forecasts for global economic growth, INCH (which stands of INdia and CHina) would account for 14.5 per cent of the world’s GDP by 2014 at market exchange rates and 21 per cent in PPP terms.

Undoubtedly, China and India are today the engines of growth in the midst of rapid economic transformation in the global economy. In fact, driven by India and China, the emerging Asian economies are no longer witnessing a slump, as per a report by the UK financial services company, Barclays.

A slew of research reports and surveys reiterate the amazing growth story of these two Asian giants.

The Organisation for Economic Co-operation and Development (OECD) has projected early signs of revival in the Indian and Chinese economy. The Composite Leading Indicators (CLI) designed to provide early signals of turning points in business cycles, rose by 0.4 points for India in April 2009, while for China increased by 0.9 points.

As per a report by the global financial services firm, BNP Paribas, India and China will be able to sidestep contraction in their growth rates in 2009-2010, despite the ongoing global economic turmoil. The recovery in the emerging markets can be attributed to the fiscal measures taken by their respective governments, which would help them post positive growth in 2010-11, the report said.

A study by the International Finance Corporation (IFC), the private lending arm of the World Bank, found that India’s policies for the software sector and China’s promotion of special economic zones (SEZs) for the manufacturing sector suggest that well-designed and sector-specific government policies can overcome weaknesses in investment climate and allow developing countries to compete globally in new fields.

India and China, without ambiguity, are the economies which have emerged most strongly through the financial crisis. Their year-on-year GDP expansion, at 7.9 per cent and 8.9 per cent, respectively, dominates third quarter world growth.

Moreover, India and China’s high rates of investment have not declined significantly. At 35 per cent and 42 per cent of GDP, respectively, the levels of gross domestic fixed capital formation in India and China are the highest in the world. The rising rates of investment in India and China, as opposed to declining rates in Japan and South Korea, have led to the former replacing the latter as Asia’s powerhouses.

India and China are also pushing for reforms and more representation for the developing countries in multilateral organisations like the International Monetary Fund and the World Bank. The two countries are also working in unison at the World Trade Organisation (WTO). In November 2009, India supported a proposal by China seeking a more representative composition in the WTO secretariat in Geneva.

Ahead of the Copenhagen Climate Summit in December 2009, India and China signed a broad agreement to cooperate in the fight against climate change and also underlined a common position on talks for a tougher global climate deal.