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India Positive Economic Outlook


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Indian Economy poised to overcome the current sentiment of a downturn

Indian Economy poised to overcome the current sentiment of a downturn

  • Report is too optimistic ignoring several ground realities, surprised how economy grows if face book user base grows. This report gave me deep industry Insight and thorough knowledge on Indian markets. Appreciate it.
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  • Hi Zinnov Team,

    Your presentation is good for eyes, but your team has over looked at growth ignoring economic perspective. When core industries are almost flat and negative Q-o-Q, because of tight RBI measures; also, wherein RBI yesterday, allowed now, government to borrow from foregin sources. Your story is biased towards one sector (IT-related) and too optimisitic to believe, as from Keyens famous quote 'In long run all are dead'.

    And, surprised at this content 'India is second largest FaceBook nation worldwide after the US”, so, you believe, facebook user base drives India's growth. Like mentioned above, certain contents has nothing to do with India's growth.

    I am giving my true comments from an economist perspective of looking at growth and hope Zinnov team takes it postively.
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  • 1. The Indian Promise Why it still holds… 20th June, 2012No Part of it may be quoted, circulated or reproduced for distribution without Zinnov Management Consultingprior written approval from Zinnov
  • 2. Skeptics question India’s potential…Standard & “Slowing GDP growth and political roadblocks to economic policymaking Poor’s could put India at risk of losing its investment grade rating” Morgan “Misguided policy approach focused on consumption is to be blamed Stanley for the steep fall in the growth momentum” “The country faces an awkward combination of slow growth andFitch Ratings elevated inflation and is a constant worry for foreign investors” Goldman “Indian stock market does not present attractive prospects for investors Sachs in the near term amid sluggish domestic & global economic outlook” 2
  • 3. …enough reasons to counter!1 Favorable demographic dividend will pay in the long run2 Indian technology consumption is exploding3 GST implementation will accelerate economic growth4 Indian MNCs and vast base of SMBs will be impossible to ignore5 Large states in India are already booming6 Indian non-metro markets hold tremendous untapped potential7 Infrastructure improvements are on the rise8 Indian Media & Entertainment industry will outpace major global markets9 Rising education level is making large base of Indians employable10 Tremendous growth in philanthropy 3
  • 4. 1 Favorable Demographic Dividend will pay in the long term Potential for Consumption of Food urbanization and Beverages much greater than China, Japan, To Increase by 250% Urban Russia and the US Population Additional 175 mn people Spending on Housing and Appliance 110 mn additions; 50% in the most 4x increase expected productive age group of 30-40 years Labour Force In contrast, china Education and to add 15 mn people; Japan to Healthcare Spending go 3 mn short 5x increase expected “Our analysis suggests demographics alone may contribute about 4 percentage points of annual GDP growth for the next two decades, from increases in labour force, higher productivity due to urbanization and having the right age structure”Source: Goldman Sachs Report: ‘India’s Rising Labour Force’ 4
  • 5. 2 Indian technology consumption is exploding (1/2) Mobile Phone Greater than France and Users Over 800 mn the UK, combined Second largest in the Internet Users Over 123 mn world after China Second largest Facebook nation Facebook Users Over 51 mn worldwide after the US People making online Over 15 mn To grow over 250% by 2015 Transactions Number of Over 400% increase in Debit Cards Over 228 mn the last 5 yearsSource: Comscore, Google, Edelweiss, Avendus, Zinnov Analysis; Press Articles 5
  • 6. 2 Indian technology consumption is exploding (2/2) E-commerce market Domestic IT market, expected to surpass $23 bn currently greater than within 4 years; second USD30 bn, is growing faster fastest growth worldwide than exports Cloud computing expected With almost 4 fold growth, to grow at more than 2X Multiple startups already online advertising market the worldwide rate; approaching $B+ sizes expected to reach $1.55 bn revenues to touch $5 bn by by 2015 2015 Online travel penetration 170 mn Aadhar (28%) higher than that in (Unique ID Cards) already China, Japan, Italy, Spain, allocated and SingaporeSource: Comscore, Google, Edelweiss, Avendus, Zinnov Analysis 6
  • 7. 3 GST implementation will accelerate economic growth While export gains are expected to vary between 3.2% to 6.3%, imports are set to benefit by 2.4% to Combined effect of FDI in 4.7% retail and implementation India’s GDP is expected to of proposed GST is increase by 0.9% -1.7% expected to raise Indian post GST’s implementation FMCG industry’s size to $47 bn by 2013 Gains from GSTSource: NCAER, FICCI-Technopak report 7
  • 8. 4 Indian MNCs and vast base of SMBs will be impossible to ignore (1/2) Number of Companies in Indian Companies in Forbes Top 2,000 Forbes Top 2,000 Potentially 175 61 Indian companies can make it to the list by 2020 33 28 India Brazil RussiaSource: Forbes, Zinnov Analysis 8
  • 9. 4 Indian MNCs and vast base of SMBs will be impossible to ignore (2/2) Medium enterprises ~1.3 Mn 8 Mn Russia 100-1000 employeess Small enterprises ~16.0 Mn 11-100 14 Mn Brazil employees Micro US enterprises ~29.7 Mn 26 Mn 1-10 Employees 45 Mn India in total GDP 17% in all enterprises 99% SMB’s in total workforce 40% 50+ Mn China share… in total manufacturing output 45% in total exports of India 40%Source: Forbes, Zinnov Analysis 9
  • 10. 5 Large states in India are already booming India’s top 5 states by population can jointly accommodate the combined population of Brazil, Mexico, Philippines, Vietnam and Egypt Uttar Pradesh (UP) GDP: $70.4 bn • Indian states viz. Delhi, Bihar, Gujarat Chhattisgarh, and Goa, grew at GDP: $65.2 bn more than 10% Y-o-Y in 2011 Maharashtra • In Jan 2012, Gujarat, witnessed GDP: $138.4 bn signing of 2,700 MoUs in a single day at the Global Investors’ summit Andhra Pradesh (AP) GDP: $68.2 bn • Maharashtra, UP, AP, TN and Gujarat contributed over 48% to the country’s GDP in 2011; the states Tamil Nadu (TN) also have the highest number of GDP: $69.9 bn factories in IndiaSource: Business Standard, MOSPI 10
  • 11. 6 Indian non-metro markets hold tremendous untapped potential IIT Joint Entrance Examination (JEE) Since 1990, five out of the total six topped by students from non-metros Indian Olympic medalists have been nine times in the last eleven years from non-metros Indian Non-metros Rising to Prominence Growth in rural FMCG markets (17.2%) Nearly 60% Indian international outpaced urban markets (16.5%) in cricketers in the last decade hailed Q1-2012; the former to grow tenfold from non-metro cities and reach $100 bn by 2025Source: Cricinfo, Nielsen, Press Articles, Zinnov Analysis 11
  • 12. 7 Infrastructure improvements are on the rise Government Spending on Development Programs1 – Eleventh Five Year Plan ($bn) Projected infrastructure investments 100% = $ 124.5 bn grew 2.5 times from 10th to 11th five year plan Others MGNREGA 27.9 Employment to 41 mn households 26.0 Growth in Infrastructure IWY during 2010-11 under MGNREGA 7.4 AIBP and other water Delhi Metro supporting greater daily resources SSA ridership than Taipei Metro; per km 13.9 programme installation cost 1/4th of the latter 8.3 NRHM RGDWM JNNURM PMGSY 12.4 8.3 8.7 11.6 51.73% annual growth in FDI in construction since 2005 Third largest road network, highway density Projected investment in 11th five year more than thrice that of China and Brazil plan; over $78 bn for road and $64 bn Fourth largest railways network, additional for railway infrastructure 20,000 km railway track to be laid by 2020Source: Ministry of Railways, DIFF, Planning Commission; CIA World Factbook, World BankNote: 1. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Sarva Siksha Abhiyan (SSA), National Rural Health Mission (NRHM), Pradhan Mantri Gram Sadak Yojana (PMGSY),Jawaharlal Nehru National Urban Renewal Mission (JNNURM), Rajiv Gandhi Drinking Water Mission (RGDWM), Accelerated Irrigation Benefit Programme (AIBP), Indira Awas Yojana (IWY) 12
  • 13. 8 Rising education level is making large base of Indians employable Rising Education Levels in India Fresh Technical College Graduates Growth: 27% Literacy level increased by Number of Enrollments 9.21% in the Universities for higher increased from education past 10 years 364 to 654 from increased by to reach 2004-05 to 103% in the 74.04% in 2010-11 last decade 2011 2010 2011 National Skill Government Development decided to set India had 700,000 fresh 99% villages technical graduates in Policy framed up 6,000 model have primary 2011, compared with by GOI to cater schools at the schools within China’s 600,000 and to needs of the block level to 1 km radius the US’s 70,000 industry for benchmark skilled workers excellenceSource: Census 2011, World Bank and UGC Report, Finance Minister Speech (FY 2013) 13
  • 14. 9 Indian Media & entertainment industry will outpace major global marketsTelevision and Newspapers Indian Cinema Indian Premier League More than 600 TV Largest movie making Brand value ~ 4 Bn channels industry worldwide 1,100 movies produced More than 82,000 160 mn + viewers world per year compared with newspapers over 700 in Hollywood 7 times higher circulation 20 mn people go to movies Higher valuation than US newspapers everyday than NBASource: FICCI, PWC, Ernst and Young, Sports Media – SportsPro, RNI 14
  • 15. 10 Tremendous growth in philanthropy 50% increase in private charitable spending since 2006 Top 20 billionaires Having increased 5 doubled their times since 2006, combined wealth corporate giving since 2008 totals $1.5 bn Over 3.3 mn NGOs Fastest Growing active in India as HNI population in Philanthropy against 1.5 mn in the in India US; 700 opening all of Asia every day on an average1Source: Bain & CoNote: 1) During last three years 15
  • 16. India promises a positive outlook India’s Strong Economic Fundamentals Consumer spending $12.3 Bn FII Declining debt to contributes 60% to investments from GDP ratio – 67.6%1 GDP – shielded Jan to May 2012, as in 2012 as opposed from external against $8.3 Bn in to 84% in 2004 influence 2011 Similar slowdown in Low external Debt to peers such as China GDP ratio of 20% (Dec and Brazil, indicate 2011) renders default Total gross savings external influence to highly unlikely; it is equivalent to 1/3rd be the cause of slow 3/5th compared with of total GDP growth; raises questions on rating Russia and less than downgrade on 1/5th compared with account of latter the USSource: RBI, IMF, Press ArticlesNote: 1) IMF Estimates 16
  • 17. Thank You 69 "Prathiba Complex", 4th A 11, Paras Downtown Centre, 4701 Patrick Henry Dr 21, Waterway Ave, Cross, Koramangala Ind. Golf Course Road, Building 7 Suite 300 Layout Sector 53 Santa Clara The Woodlands 5th Block, Koramangala Gurgaon – 122002 CA 95050 TX – 77380 Bangalore – 560095 Phone: +91-124- 4378211/13 Phone: +1-408-716-8432 Phone: +1-281-362-2773 Phone: +91-80-41127925/6No Part of it may be quoted, circulated or reproduced for distribution without Zinnov Management Consultingprior written approval from Zinnov