Is India shining?

I recommend all NRI s to read this. This interesting document was sent by my good friend Mr. Seshadri.

  INDIA'S FUTURE

or prosperity will spread in India, but happiness will not, until we      fix  governance.

*Where are we coming from? 

* Where are we today?

* Where are we going in the future?

Even though the world has just discovered it, the India

growth story is not new.

It has been going on for 25 years.

WHAT IS THE INDIA STORY? 

 

 

 

 

India is now 4th largest economy

The India model is unique 

 

 

 

Reasons for success

India's success is market led

Whereas china's is state induced

The entrepreneur is at the

centre of the Indian model. 

India has a vibrant private space

* 100 Indian companies have market cap of us$ 1 bn.

* 1000 companies have received foreign institutional investment

*125 Fortune 500 companies have R & D bases in India

390 Fortune 500 companies have outsourced software development to India

* 2% bad loans in Indian Banks (v- 20% in China)

* 80% credit goes to private sector (V- 10% in China)

Public space is a problem

We have 

* Dynamic democracy with honest elections

* Free, lively media and Press

But we also have 

Poor Governance 

Governance Failures

*Not a minister caught with bribe 

* 1 out of 4 teachers absent in Government schools 

* 2 out of 5 doctors absent in primary health centres

* Delhi's water

* Land titles

* Etc

 

 

Key reforms 

* Opened economy for trade and Investments

* Dismantled controls

* Lowered tariffs

* Dropped tax rates

* Broke public sector monopolies

Understanding India's economic success

*Remarkable - every government has reformed (slowly) since 1991

* Even slow reforms add up

* 65 countries have done 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 Crystal 

Cambridge Encyclopedia of the English Language

 

Where are we today ? 

* Growth fell to 6.7% in 08-09: 7% in 09-10

*Pain has been less than in China

*Competitive companies have recovered faster

*Risk of protectionism has receded

*Recovery has been ahead of the world

Where are we going? 

*Base case post recovery is 7.5% - 8.5% GDP growth

* Democracy will not permit more than 8% unless you have Thatcher

* 1.5 % population growth

* Demographic dividend - growth will continue beyond China's

 

Convergence in the 21st century 

*Why convergence is intuitive?

* Convergence did not happen in the20th century because the world was closed

* Returning to a world of equality prior to 1750

* When China and India accounted for 45% world GDP

 What could stop the show?

- Infra structure

- improving via public-private partnerships

- Fiscal deficit 

- Governance

None of these stopped the show in the past 25 years

 - Nuclear war

Caste System

* Origin of India's caste system

*Classical four castes vs 3000 jatis

* Hostage to competitive politics

* Source of competitive advantage

* Affirmative action

Elephant Not tiger

* India got democracy before capitalism and this has made all the difference

*It is slower than China but its path is surer

*However an elephant at 8% growth is a formidable beast

* We have waited 3000 years for this moment

*India is more likely to preserve its way of life