Indian Economy – A View

Amartya Sen, Nobelist

“The frustrating thing about India is that whatever you can rightfully say about India, the opposite is also true.”

Simon Kuznets used to say there were four kinds of countries; developed, developing, Japan and Argentina

Today there also are four kinds; developed, developing, China and India.

President Obama

“India is not emerging; India has emerged”.

India – Study in Contradiction

In India we are like that - Growth Growing fast. Greater than 8 %

growth in last few years. Avoided the recession GDP > US $ 1 trillion, PPP based >

US $ 3.5 trillion. 4th largest in a list of 180

Uneven growth – HDI rank 134th out of 187, Gini ratio rank 55th out of 136. Gender Gap rank 113th out of 136

India – Imbalanced GDP Composition

Sector GDP Share % Employment Share %

Agriculture 17 50

Industry 29 20

Services 54 30

Total 100 100

In India we are like that – Growth: Pros Self sufficiency and more in agriculture.

Demolished demons of ‘Limits to Growth’. Stagnation in recent years.

Impressive industry growth. Oil, Steel, Mining, Pharmaceutical, energy and Auto. Bio-technology, Space, Armament.

Services – Rapid growth in banking, retail, insurance, education. IT and ITES, Tradition and capability of research and development

In India we are like that – Growth: Pros Democracy, Individual Freedom,

Transparency, Vibrant and active media

Active and generally honest judiciary Politically savvy illiterates, Federalism Large and growing middle class Mature capital markets, banking

sector and flow of foreign institutional investment.

In India we are like that – Growth: Pros Amazing diversity – geographical,

economic, social, political, cultural. 325 languages spoken – 1,652 325 languages spoken – 1,652 dialects, 18 official languagesdialects, 18 official languages

ccoexistence of modernity and an anti-modernity

Demography – A Boon or a bane?

In India we are like that – Growth: Demographic Dividend

Young India, 50% less than 25 years of which 30 % less than 16

The billion people challenge; 1.2 billion now, 1.48 in 2030, 1.6 in 2050.

Plummeting birth rates, death rates. High infant mortality rate

Addition to working age population in next two decades. Africa 340 million, India 213 million, US 14 million, Japan (11) million, China (45) million, Europe (54) million.million.

China and India – Demographic Structures

In India we are like that – Growth: Cons

Disproportionate concentration of employment in agriculture.

Running to catch up in infrastructure Rapid urbanization and Urban decay.

62 % rural, 38 % urban Inadequate and improper

governance – corruprion. Govt. policy paralysis, policy confusion, populism.

In India we are like that – Growth: Cons

Erratic reforms ‘China is a closed country with open mind, India, open with closed mind’ (Setback in policy on FDI in retail)

Victim of cross-border terrorism Rising expectations, social unrest Maoism

In India we are like that – Growth: Cons

Inflation Political divide puts pressure on

federalism. Uneven income, opportunity Regional disparity Black money – economics and

politics of it

Triple Threats

Relationship with Pakistan and China

Political chaos Global economic instability