Forget China, Asia's biggest worry is India: Stephen Roach

Concerns over India’s slowing economy just seem to be growing. Even Stephen Roach, non -executive chairman at Morgan Stanley thinkstalks about the China crisis are overblown and India is the country to worry about in Asia.

“India is a place that bears special scrutiny,” said Roach in an interview to CNBC-TV 18. India is the only economy in Asia with a current account deficit and a big budget deficit which limits their ability to use monetary fiscal policy to deal with an emerging downshift in the Indian economy.

So if you are really concerned about Asia, you should forget about China as they will be fine, he said.

He was particularly concerned about India as he said that trade is not the main drive for India and is a small piece of the India economy. Also there is a lot of pressure on central banks to keep rates high with the currency in a free fall mode.

The Indian economy is slowing, GDP is less than seven percent and the industrial output contracted in the month of October. While China has already started easing its monetary policy, India does not have that option.

Watch to the video: Lot of pressure on RBI to keep rates high: Stephen Roach