India

A growing economy By Koushik Dutta

India: rising GDP growth

% average annual GDP growth

1900 – 1950 1.0 1950 – 1980 3.5 1980 – 2002 6.0 2002 – 2006 8.0

• What do these figures tell you about the Indian economy?

Population growth

% average annual growth

1901 – 1950 1.0 1951 – 1980 2.2 1981 – 1990 2.1 1991 – 2000 1.8

2001 – 2010 1.5

• What do these figures tell you about population growth in India?

% 1950 17 1990 52 2000 65

2010 (projected) 80

• What do these figures tell you about changes to education

in India?

Adult literacy rates

% of population Million People

1980 8 65

2000 22 220

2010 (projected) 32 368

• What do these figures tell you about the service sector economic growth in India?

People categorised as middle class

Estimates of those in poverty

1980 46%

2000 26%

2010 (projected) 16%

• 1% of the people have been crossing poverty line each year for 20 years. Equals 200 million people.

• What do these figures tell you about anti-poverty strategies in India?

Poverty statistics

Productivity is rising

30% to 40% of GDP growth is due to

rising productivity

India is now the 4th largest economy

It will overtake Japan between 2012 and 2014 to become the 3rd largest world economy

DRIVERS OF GROWTH

India East and S.E. Asia

Domestic Exports Services Manufacturing Consumption Investment High tech, capital Low tech, labour intensive industry intensive industry

What is the implication of the Indian model?

• Has India skipped the industrial revolution?

• How does India take its people from farms to cities?

Rise of globally competitive

Indian companies:

Reliance, Jet Airways, Infosys, Wipro,

Ranbaxy, Bharat Forge, Tata Motors,

TCS, Bharati, ICICI and HDFC Banks

Demographic trend points to sharp increases in input factors

54%

46%

25+ yrs

0-25 yrs

Demographic Split

420800

0200400600800

1,0001,2001,4001,600

2005 2025

1.5 bn

1.1 bn

Labor Force

Labor Force will double in the next 20 years

Demographic trend points to sharp increases in input factorsAge Dependency

72%

45%<50 %

62%

0%

20%

40%

60%

80%

1980's 2002 2025 China 2002

17%

42%35+%

24%

0%

10%

20%

30%

40%

50%

1980's 2002 2025 China 2002

Savings Rate

Higher savings and investment rate will translate into higher GDP growth

“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.”

-Prof. David Crystal, Cambridge Encyclopedia of the English Language