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Final
India has experienced high economic growth over the past 25 years, averaging around 6-8% annually. While prosperity has increased, improvements in governance are still needed to enhance well-being. The growth has been led by domestic factors like consumption and services rather than exports. This domestically-driven model has made India's economy more insulated from global downturns compared to other countries. However, problems remain such as poor governance, infrastructure bottlenecks, and an education system that is failing many. Overall though, India is well-positioned for continued growth that could see it become one of the world's largest economies by mid-century if reforms are sustained and key challenges addressed.
Final
- 1. INDIA’S FUTUREOr prosperitywill spread in India but happiness will not, until we fix governancebyGurcharan DasNovember 12, 2009WIPROMarbella
- 2. Where are wecoming from?
- 3. Where arewe today?
- 4. Where arewe going in the future?
- 5. Even though theworld hasjust discovered it, the Indiagrowth story is not newIt has been going on for 25 years
- 6. What is theIndia story?
- 7. 28 years of high growthAverage annual GDP growth(%)108.986.063.541.0201900-19501950-19801980-20022002-2007
- 8. Population growth isslowing (%)2.52.22.12.01.81.51.51.01.00.501901-19501951-19801981-19901991-20002001-2010Sources: 1900-1990: Angus Maddison (1995), Monitoring the World Economy, 1990-2000:Census of India (2001)
- 9. Literacy is rising(%)100808065526040172001950199020002010(proj)Source: Census of India (2001)
- 10. When middle classis 50% then the politics will also change(m)032%22%8%40036830020022010065198020002010 Source: The Consuming Class, National Council of Applied Economic Research, 2002
- 11. Poverty is declining(%)501%of the people have been crossing poverty line each year for 25 years Equals ~ 200m464030262016100198020002010
- 12. Per capita incomegains1,178198020053,051US$ pppSource: World Bank
- 13. India is nowthe 4th largest economyIt will overtake Japan between 2012 and 2014 to become the 3rd largest
- 14. The India modelis unique
- 15. Drivers of growthIndiaDomesticEastand S.E. Asia Exports
- 16. Drivers of growthIndiaDomesticServicesEastand S.E. Asia Exports Manufacturing
- 17. Drivers of growthIndiaDomesticServicesConsumptionEastand S.E. Asia Exports Manufacturing Investment
- 18. Drivers of growthIndiaDomesticServicesConsumptionHightech, capital intensive industryEast and S.E. Asia Exports Manufacturing Investment Low tech, labour intensive industry
- 19. Implications of Indiamodel ‘Domestically led’ means:Insulation from global downturnsLess volatilityWe will come out of the global crisis faster
- 20. Implication of Indiamodel ‘Services led’ raises uncomfortable questions:Have we skipped the industrial revolution?
- 21. How do wetake people from farms to cities?
- 22. Will SEZ’s beour tipping point?Implication of India model – Consumption led33%59%42%64%IndiaIndiaChinaChina41%U.S.Europe58%45%BrazilPeople Friendly:Consumption as % of GDPPeople Friendly, Less inequality: Gini IndexWill India become the next big consuming economy after the U.S.?
- 23. Reasons for successIndia’ssuccess is market-led whereas China’s is state inducedThe entrepreneur is at thecentre of the Indian model
- 24. Rise of globallycompetitive Indian companies
- 25. India has avibrant private space 100 Indian Companies have market cap of US$ 1bn
- 26. India has avibrant private space 100 Indian Companies have market cap of US$ 1bn 1,000 Indian Companies have received foreign institutional investment
- 27. India has avibrant private space 100 Indian Companies have market cap of US$ 1bn 1,000 Indian Companies have received foreign institutional investment125 Fortune 500 companies have R&D bases in India
- 28. India has avibrant private space 100 Indian Companies have market cap of US$ 1bn 1,000 Indian Companies have received foreign institutional investment125 Fortune 500 companies have R&D bases in India390 Fortune 500 companies have outsourced software development to India
- 29. India has avibrant private space 100 Indian Companies have market cap of US$ 1bn 1,000 Indian Companies have received foreign institutional investment125 Fortune 500 companies have R&D bases in India390 Fortune 500 companies have outsourced software development to India2% bad loans in Indian banks (v~20% in China)
- 30. India has avibrant private space 100 Indian Companies have market cap of US$ 1bn 1,000 Indian Companies have received foreign institutional investment125 Fortune 500 companies have R&D bases in India390 Fortune 500 companies have outsourced software development to India2% bad loans in Indian banks (v~20% in China)80% credit goes to private sector (v~10% in China)
- 31. Public space isa problemWe haveDynamic democracy with honest electionsFree, lively media and pressBut we also havePoor governance!
- 32. Governance FailuresNot theminister caught with a bribe
- 33. 1 outof 4 school teachers absent in government schools 2 out of 5 doctors absent in primary health centers Delhi’s water
- 34.
- 35. EtcIronically, weused to have world class institutions from 1950-1980, but our problem was growth.Now we have growth, but our institutions are failing BureaucracyJudiciary Police
- 36. The economy growsat night when the government is asleep
- 38. Key reformsOpened economyto trade and investmentDismantled controls Lowered tariffsDropped tax ratesBroke public sector monopolies
- 39. Understanding India’s economicsuccessRemarkable --every government has reformed (slowly) since 1991Even slow reforms add up
- 40. 65 countries havedone the same reforms – why did India become the second fastest in the world? Unappreciated fact – rule of law “By 2010 India will have world’s largest number of English speakers”“When 300 million Indians speak a word in a certain way, that will be the way to speak it.”Professor David CrystalCambridge Encyclopedia of the English Language
- 41. Understanding India’s economicsuccessMental revolution among the young‘I want to be Bilgay’ Raju’s secret of successBanianisation of society180 TV channels; 65 news channelsThe rise of Hinglish
- 42. Where are wetoday?Growth fell to 6.7% in 08-09; 7% in 09-10
- 43. Pain hasbeen less than in China
- 44. Competitive companieshave recovered faster.
- 45. Risk ofprotectionism has receded
- 46. Recovery hasbeen ahead of the worldWhere are we going?Base case post recovery is 7.5 % – 8.5 % GDP growth Democracy will not permit more than 8% unless you have a Thatcher1.5% population growth Demographic dividend – growth will continue beyond China’s
- 47. Per capita incomeOna ppp basis ($000)4030201002000200520202040206637,00016,8005,8003,0502,100
- 48. Convergence in the21st centuryWhy convergence is intuitive?Convergence didn’t happen in the 20th century because the world was closedReturning to a world of equality prior to 1750When China and India accounted for 45% of world GDP
- 49. 50%50%India will graduallyturn middle-classWest of theKanpur-Chennai lineEast of theKanpur-Chennai lineKanpur-32%22%Chennai8%19802000201020202040
- 50. What could stopthe show? Infrastructure- Improving via public-private partershipsFiscal Deficit
- 51. GovernanceNone ofthese stopped the show in the past 25 years- Nuclear War?
- 52. Education SystemIs reasonablygood for the top 20%But it is abysmal for the rest1 in 4 teachers is absent in government primary schoolsHence, 54% of children in urban India are in private schoolsSolution: Education Vouchers
- 53. Caste systemOrigin ofIndia’s caste systemClassical four castes vs 3000 jatisHostage to competitive politics Source of competitive advantageAffirmative action
- 54. Role of ReligionIndia’spluralism, diversity and tolerance1%2%12%85%HinduMuslimSikhChristianHinduismSpiritual entrepreneurialism: GurusNo hierarchy: Every Brahmin thinks he is the Pope300 million gods: Lack of theological narcissismNasadiya Temper
- 55.
- 56. It is slowerthan China but its path is surer
- 57. However, an elephantat 8% growth is a formidable beast
- 58. We have waited3000 years for this moment
- 59. India is morelikely to preserve its way of life The Wise Elephant