India's leaders are anticipating that their country's economy will be able to maintain is rapid growth in the coming years, according to a new government economic survey.  Whether or not India can indeed boast the "fastest growing economy" by 2014, as the survey predicts, the rapid recovery of India's GDP even as prices lag around the globe remains a story to watch.  China will remain the giant in Asia, but it is interesting to watch the success of India compared to its neighbor.  As China grows on the strength of manufacturing, India's is a service economy.  World Bank economic advisor Ejaz Ghani says India's success is a new model for developing countries, and just might allow them to jump ahead on the traditional path of growth.  Ghani writes, at VoxEu:

The Services Revolution could upset three long-held tenets of economic development. First, services have long been thought to be driven by domestic demand. They could not by themselves drive growth, but instead followed growth. In the classical treatment of services, any attempt to expand the volume of services production beyond the limits of domestic demand would quickly lead to deterioration in the price of services, hence a reduction in profitability, and hence the impulse towards expanded production would be choked off.

Second, services in developing countries were considered to have lower productivity and lower productivity growth than industry. As economies became more service oriented, their growth would slow. For rich countries, with high demand for various services, the slowdown in growth was an acceptable consequence of the higher welfare that could be achieved by a switch towards services. But for developing countries such a trade off was thought to be inappropriate.

Third, services jobs in developing countries were thought of as menial, and for the most part poorly paid, especially for low skilled workers. As such, service jobs could not be an effective pathway out of poverty.

India’s development experience offers hope to late-comers to development in Africa. The marginalisation of Africa during a period when China and other East Asian countries grew rapidly has led some to wonder if late-comers to development like Africa are doomed to failure. Many considered the “bottom billion” to be trapped in poverty (Collier 2007). The process of globalisation in the late 20th century led to a strong divergence of incomes between those who industrialised and broke into global markets and a bottom billion” of people in some 60 countries where incomes stagnated for twenty years. It seemed as if the bottom billion would have to wait their turn for development, until the giant industrialisers like China became rich and uncompetitive in labour-intensive manufacturing.

Read The service revolution in India here.