7. 28 years of high growth Average annual GDP growth (%) 10 8.9 8 6.0 6 3.5 4 1.0 2 0 1900-1950 1950-1980 1980-2002 2002-2007
8. Population growth is slowing (%) 2.5 2.2 2.1 2.0 1.8 1.5 1.5 1.0 1.0 0.5 0 1901-1950 1951-1980 1981-1990 1991-2000 2001-2010 Sources: 1900-1990: Angus Maddison (1995), Monitoring the World Economy, 1990-2000:Census of India (2001)
9. Literacy is rising (%) 100 80 80 65 52 60 40 17 20 0 1950 1990 2000 2010 (proj) Source: Census of India (2001)
10. When middle class is 50% then the politics will also change (m) 0 32% 22% 8% 400 368 300 200 220 100 65 1980 2000 2010 Source: The Consuming Class, National Council of Applied Economic Research, 2002
11. Poverty is declining (%) 50 1% of the people have been crossing poverty line each year for 25 years Equals ~ 200m 46 40 30 26 20 16 10 0 1980 2000 2010
12. Per capita income gains 1,178 1980 2005 3,051 US$ ppp Source: World Bank
13. India is now the 4th largest economy It will overtake Japan between 2012 and 2014 to become the 3rd largest
16. Drivers of growth India Domestic Services East and S.E. Asia Exports Manufacturing
17. Drivers of growth India Domestic Services Consumption East and S.E. Asia Exports Manufacturing Investment
18. Drivers of growth India Domestic Services Consumption High tech, capital intensive industry East and S.E. Asia Exports Manufacturing Investment Low tech, labour intensive industry
19. Implications of India model ‘Domestically led’ means: Insulation from global downturns Less volatility We will come out of the global crisis faster
25. India has a vibrant private space 100 Indian Companies have market cap of US$ 1bn
26. India has a vibrant private space 100 Indian Companies have market cap of US$ 1bn 1,000 Indian Companies have received foreign institutional investment
27. India has a vibrant private space 100 Indian Companies have market cap of US$ 1bn 1,000 Indian Companies have received foreign institutional investment 125 Fortune 500 companies have R&D bases in India
28. India has a vibrant private space 100 Indian Companies have market cap of US$ 1bn 1,000 Indian 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
29. India has a vibrant private space 100 Indian Companies have market cap of US$ 1bn 1,000 Indian 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)
30. India has a vibrant private space 100 Indian Companies have market cap of US$ 1bn 1,000 Indian 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)
31. Public space is a problem We have Dynamic democracy with honest elections Free, lively media and press But we also have Poor governance!
38. Key reforms Opened economy to trade and investment Dismantled controls Lowered tariffs Dropped tax rates Broke public sector monopolies
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41. Understanding India’s economic success Mental revolution among the young ‘I want to be Bilgay’ Raju’s secret of success Banianisation of society 180 TV channels; 65 news channels The rise of Hinglish
47. Per capita income On a ppp basis ($000) 40 30 20 10 0 2000 2005 2020 2040 2066 37,000 16,800 5,800 3,050 2,100
48. Convergence in the 21st century Why convergence is intuitive? Convergence didn’t happen in the 20th century because the world was closed Returning to a world of equality prior to 1750 When China and India accounted for 45% of world GDP
49. 50% 50% India will gradually turn middle-class West of theKanpur-Chennai line East of theKanpur-Chennai line Kanpur- 32% 22% Chennai 8% 1980 2000 2010 2020 2040
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51. GovernanceNone of these stopped the show in the past 25 years - Nuclear War?
52. Education System Is reasonably good for the top 20% But it is abysmal for the rest 1 in 4 teachers is absent in government primary schools Hence, 54% of children in urban India are in private schools Solution: Education Vouchers
53. Caste system Origin of India’s caste system Classical four castes vs 3000 jatis Hostage to competitive politics Source of competitive advantage Affirmative action
54. Role of Religion India’s pluralism, diversity and tolerance 1% 2% 12% 85% Hindu Muslim Sikh Christian Hinduism Spiritual entrepreneurialism: Gurus No hierarchy: Every Brahmin thinks he is the Pope 300 million gods: Lack of theological narcissism Nasadiya Temper