BOOM ! BOOM !! BOOM !!!
THE SMILING FACE OF INDIA
IN 2006, Indians bought 65 million mobile phones, 10 million television
sets, 6.34 million personal computers, and over a million new cars. A
consumer boom in of this kind has not been seen in India ever before. But all
these happen in last year. This year is expected to be still better, through not
many are willing to hazard a guess on what these numbers will be. The Delhi
based manufactures association of information technology estimates PC
sales to touch 8 million this year.
The growth is not restricted to
just products. It is being driven infrastructure projects like new airports. The
rising incomes in India have seen people investing in new flats and
apartments this leads to rise in demand of steel and cement.
This boom is clearly reflected in the GDP growth. During the last fiscal,
GDP grew by 9.4 %, which makes India the second fastest growing major
economy after China.
Among the sectors that are driving the Indian growth story are
telecommunications, retail, information technology and the IT enabled
services. Not surprisingly, telecommunications is among the fastest growing
industries.
Already, the market for
mobile phones in India is a net$16.7 billion and it is growing at over 20%
annually. That’s being driven by the addition of 6 million plus new mobile
subscribers, each of the top telecom service providers is investing in the
region of$2-3 billion a year in capital expenditure alone. In comparison, the
$5.6 billion consumer electronics and appliance market is growing at around
10 percent.
Retail consulting and research agency KSA technopak predicts that there
will be 600 new shopping malls in India by 2010 and retailing in India will
cross the US $721.5 billion mark from the current US $ 7.5 billion. Global
luxury brands like Channel, Hugo boss, Christion Dior and LVMH have
opened outlets in metropolitan cities.

As the foreign companies expand their India presence, they are
getting their global vendors to set up plants in India. That will bring in
furthering industrial growth.
Among the sectors driving growth, but is not clearly visible are the small
and medium enterprises (SMEs). These enterprises account for nearly half of
India’s industrial output and contribute to 35% of exports.
While all these sounds hunky dory, the big question is whether this growth
can be sustained?
This time round, the 9.4 % GDP growth has been fuelled largely by
industrial growth. The 11.5% growth in industrial output during 2006-2007
is driven by a 12.5 % growth in manufacturing and 11.5% growth in
electricity.
The July 2007 issue of the Confederation of Indian industry’s (CII)
quarterly state of the economy report shows that there are signs of decline in
the growth in consumer durables and capital goods sector. Not surprisingly,
the biggest culprit could be the high interest rates resulting increasing EMIs.
Another reason is the appreciation of Indian rupees to a nine-year high.
Exports which account for two-fifth of India’s industrial output, rose 18% in
may after increasing 23 % in previous month. The third problem could arise
from higher global commodity prices.
But despite all this, tax collections of the government are on a high and CII
has forecast GDP to grow at 8.5 % in 2007-08 looking at the global
moderation of growth, inflation, falling demand as a result of spiraling
interest rates, appreciating rupees and significant supply shortages in the
global and Indian economy.
Companies’ results which are available show that revenues and profits are
higher.
However, there is no reason to get worried. That’s because the Indian
economy today has the resilience to overcome such problems. It remains to
be seen whether the India can catch up with China in the not too distant
future.