India has many hidden strengths that are not fully reflected in economic reports and statistics. These include having the largest number of entrepreneurs and small startups in the world, especially in trading and retail. It is also easy to start a business in India where only local licenses are required. Despite high interest rates, many small businesses are very profitable. India also has a high savings rate, money multiplier effect, and assets held by the government, PSUs, banks, and individuals. Tapping into these hidden strengths could help India realize its full economic potential and regain its former status as a leading global economy.

1. Hidden Strengths of India – 7th
Feb 2016
R.Kannan
India continues to do well in the Global Economy despite there is a big scope for reforms in the
various sectors of the Economy. The proposed reforms are work in progress Once they are
implemented India will continue to grow at higher than the present levels.
India has many hidden strengths which are not reflected in the reports , statistics and surveys
carried out by experts. By capitalising the strengths, India would be able to realise its full potential of
Economic growth.
1. Largest number of entrepreneurs in the world. India has the largest number of
entrepreneurs in the world. Most of these entrepreneurs are in the services sectors ,
especially , trading. Tier 2, 3, 4 cities and villages have entrepreneurs in the areas of trade
and related activities. There are more than 20 million entrepreneurs in India and assuming
an average house hold size of 5, 100 million people depend on these activities in India.
2. Largest number of small start ups in the world. Traditionally, in India, lot of new start ups,
especially in Trading are being created by small entrepreneurs. This is mainly in the areas of
retailing and trade. The phenomenon is witnessed not only in Urban areas but also in rural
areas.
3. It is very easy to start a business in India, where only the local licenses are required. The
businesses which require license from local body is easy to start. It does not require licenses
from District , State and Central government levels.
4. Profitable businesses at high interest rates. In India, interest rates vary from 0% to 4000%
p.a . The small vendors borrow funds at 10% day and they generate 30% returns per day.
Despite the rates of interest are very high, the loans are still affordable. Many of the small
businesses generate very high margins and they have the best asset and working capital
turnover.
5. Availability of funding from various sources. Since the savings rate is very high, there are
many sources from which funding for business could be raised. Starting from friends to small
money lenders , funding is available from Micro Finance Institutions, State funding agencies,
central government agencies, banks, financial institutions, corporates, Primary market,
secondary market , Private equity, FDI, FII’, foreign Hedge Funds and provident funds are
available.
6. High generation of employment in small scale sector. Most of the employees in India are in
the unorganised sectors and especially in small scale. Lot of new jobs are being created in
the small scale. After the advent of mobile phones and their penetration in the rural areas ,
lot of employment is generated in the related fields even in rural areas.
7. Very high savings rate. India has a very high savings rate of 30%. This is equivalent to $ 600
bn a year. In a five years, the savings generated will be equivalent to $ 3 trillion. This is three
times the requirement of investments required for investment in Infrastructure. If attractive

2. financial instruments are created , it would be possible to meet funding for the
infrastructure investment within India.
8. High money multiplier. Since most of the transactions in India are carried out by Cash, the
money multiplier is much higher than the statistics on the Indian economy. Since the
multiplier is higher, this helps to generate value addition at different levels in the Economy.
9. Very high assets holdings by Government, Government agencies, PSU’s,Banks , Corporates,
Religious bodies, NGO’s and Individuals. There are big land holdings, gold holdings in the
economy and if the market value of these assets are valued , the debt equity ratio for the
above would be much lower than the Economic Statistics. There is a need to capitalise
hidden assets by various entities in the economy.
Overnight, the PSU’s can be turned around. Since they hold land in Prime areas. Public
Sector Banks hold lots of real estate assets and the market value of investments by LIC is
much higher than the cost of investments. Gold is held by many religious institutions and
Individuals. Most of the assets are in illiquid form and strategies have to be developed for
making them liquid and performing.
10. Self supporting local communities. Since India is very large and dominance of rural areas,
many rural communities are still immune to what is happening globally and they can sustain
their performance irrespective of the global economic developments . The small economies
can be protected from high volatility.
11. Higher competition between states. Now each state government behaves like an
entrepreneur and there are initiatives in each state to attract more investments and each
state has set up a target to grow the economy at a faster rate than the Indian economic
growth. The initiatives in three to four states alone can lead to higher economic growth
levels in India , when the programmes are implemented .
12. The real GDP. Since there is a big parallel economy in India, the real GDP is much higher
than the GDP reported . Most of the risk funding, where returns are not certain, comes from
funding sources from Parallel Economy. Parallel economy is also helping to sustain the
higher level of economic activities in India.
13. Indian Diaspora. Their asset holdings in other parts of the world are very high. Now, many of
the economies in the Globe are becoming unattractive, many of them are looking at the
investment in opportunities in India. As and when , the conditions become favourable for
their investment, more funds would come to India from Diaspora.
14. India’s consumers. In India, as per the Income classification, we have the maximum number
of customer segments in India. There is a constant movement of consumers moving from
lower category to next higher category. This creates demand for all types of goods. For e.g.,
there is a demand for the cheapest car to the costliest car in the world.
15. Attractiveness of Investment. The reports released by various agencies in the world does not
reflect the reality. The ranking is given on small data of variables and it does not represent
the reality. The situation is not as bad as reported. As per the survey done by World

3. Economic Forum this year, India ranks top amongst all the countries in the world for the
attractiveness of investments.
India has all the strengths, as outlined above and we have to develop strategies and action plans to
capitalise the hidden potential. The action plans developed should not disturb the existing eco
system which is favouring creation of entrepreneurs. The action plans should add to the present
strengths. In 1700’s and before, India was one of the leading economies in the world contribution to
a significant portion of Global GDP. This will add 2% to our GDP ,India can regain its status of the
leading country in the world.
www.indiaat10.blogspot.com