Final
Upcoming SlideShare
Loading in...5
×

Like this? Share it with your network

Share
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
481
On Slideshare
481
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
5
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. INDIA’S FUTURE
    Or prosperity will spread in India
    but happiness will not, until we fix governance
    by
    Gurcharan Das
    November 12, 2009
    WIPRO
    Marbella
  • 2.
    • Where are we coming from?
    • 3. Where are we today?
    • 4. Where are we going in the
    future?
  • 5. Even though the world hasjust discovered it, the Indiagrowth story is not new
    It has been going on for 25 years
  • 6. What is the India story?
  • 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
  • 14. The India model is unique
  • 15. Drivers of growth
    India
    Domestic
    East and S.E. Asia
    Exports
  • 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
  • 20. Implication of India model
    ‘Services led’ raises uncomfortable questions:
    • Have we skipped the industrial revolution?
    • 21. How do we take people from farms to cities?
    • 22. Will SEZ’s be our tipping point?
  • Implication of India model – Consumption led
    33%
    59%
    42%
    64%
    India
    India
    China
    China
    41%
    U.S.
    Europe
    58%
    45%
    Brazil
    People Friendly:Consumption as % of GDP
    People Friendly, Less inequality: Gini Index
    Will India become the next big consuming economy after the U.S.?
  • 23. Reasons for success
    India’s success is market-led whereas China’s is state induced
    The entrepreneur is at thecentre of the Indian model
  • 24. Rise of globally competitive Indian companies
  • 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!
  • 32. Governance Failures
    • Not the minister caught with a bribe
    • 33. 1 out of 4 school teachers absent in
    government schools
    • 2 out of 5 doctors absent in primary health
    centers
  • Ironically, we used to have world class institutions from 1950-1980, but our problem was growth.Now we have growth, but our institutions are failing
    Bureaucracy
    Judiciary
    Police
  • 36. The economy grows at night when the government is asleep
  • 37.
  • 38. Key reforms
    Opened economy to trade and investment
    Dismantled controls
    Lowered tariffs
    Dropped tax rates
    Broke public sector monopolies
  • 39. Understanding India’s economic success
    • Remarkable --every government has reformed (slowly)
    since 1991
    • Even slow reforms add up
    • 40. 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 CrystalCambridge Encyclopedia of the English Language
  • 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
  • 42. Where are we today?
    • Growth fell to 6.7% in 08-09; 7% in 09-10
    • 43. Pain has been less than in China
    • 44. Competitive companies have recovered faster.
    • 45. Risk of protectionism has receded
    • 46. 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 a Thatcher
    1.5% population growth
    Demographic dividend – growth will continue beyond China’s
  • 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
  • 50. What could stop the show?
    • Infrastructure
    - Improving via public-private parterships
    • Fiscal Deficit
    • 51. Governance
    None 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
  • 55. Elephant and not Tiger
    • India got democracy before capitalism and this has made all the difference
    • 56. It is slower than China but its path is surer
    • 57. However, an elephant at 8% growth is a formidable beast
    • 58. We have waited 3000 years for this moment
    • 59. India is more likely to preserve its way of life
  • The Wise Elephant