A SHORT CONDUCTED TOUR OF THE WORLD’S MOST
COMPLEX AND AMONG ITS FASTEST GROWING
ECONOMIES.
MOHAN GURUSWAMY
Meet India!
Mo...
Modern India now has over 2000 ethnic groups. Modern Indian languages have
evolved from all the world’s four language fami...
The once and future world?
Major world economies from 0-2005.
June 17, 2014Mohan Guruswamy
3
A history of World GDP’s (1990 $ PPP)
June 17, 2014Mohan Guruswamy
4
The brave new world to come!
June 17, 2014
5
Mohan Guruswamy
June 17, 2014Mohan Guruswamy 6
June 17, 2014Mohan Guruswamy 7
The world at the end of the current decade.
-WORLD GDP over the past 12 months was about $65 trillion. In the year
to September 2013, global output will be about $10 ...
Goldman Sachs predictions of GDP’s till 2050.
June 17, 2014Mohan Guruswamy
9
Source: http://www2.goldmansachs.com/insight/research/reports/99.pdf
The stuff our dreams are made off?
June 17, 2014Mohan...
BRIC’s will be bigger than G-6 by 2050.
(In 2003 US $ bns.)
June 17, 2014Mohan Guruswamy
11
June 17, 2014Mohan Guruswamy 12
WGDP growth since 2004.
June 17, 2014Mohan Guruswamy 13
Whatever happened to Japan?
June 17, 2014Mohan Guruswamy
14
June 17, 2014Mohan Guruswamy 15
The story of the pyramids.
June 17, 2014Mohan Guruswamy 16
Why everybody is excited about India?
June 17, 2014Mohan Guruswamy 17
India’s late surge!
India’s burgeoning middle-class.
June 17, 2014Mohan Guruswamy
18
June 17, 2014Mohan Guruswamy 19
China’s aging problem.
It will get old before it gets rich.
Life expectancy has more than ...
India’s growing workforce.
June 17, 2014Mohan Guruswamy
20
June 17, 2014Mohan Guruswamy 21
Structure of the Economy
The Poverty Map of India.
June 17, 2014Mohan Guruswamy
22
What are India’s grim realities?
June 17, 2014Mohan Guruswamy
23
Reality 1. 62% of agricultural land is rainfed. 64.8% of...
What are India’s grim realities? - 2
June 17, 2014Mohan Guruswamy
24
Reality 4. Regional imbalances growing.
Reality 5. ...
June 17, 2014Mohan Guruswamy 25
The Greatest Show on Earth!
Not a bad performance at all!
June 17, 2014Mohan Guruswamy
26
Improving CAD.
June 17, 2014
27
Mohan Guruswamy
A banking crisis ahead?
June 17, 2014Mohan Guruswamy
28
The high cost of populism.
June 17, 2014Mohan Guruswamy
29
A snapshot of the economic crisis.
June 17, 2014Mohan Guruswamy
30
June 17, 2014Mohan Guruswamy 31
India’s International Trade.
June 17, 2014Mohan Guruswamy 32
The growing importance of Asia to India.
June 17, 2014Mohan Guruswamy 33
The nature of India’s International Trade.
June 17, 2014Mohan Guruswamy 34
India’s energy scenario.
June 17, 2014Mohan Guruswamy 35
A Petroleum Products Exporter!
June 17, 2014Mohan Guruswamy 36
BJP’s Main Economic Drivers.
Urbanization as an Economic Driver.
June 17, 2014Mohan Guruswamy
37
Railways as an Economic Driver.
June 17, 2014Mohan Guruswamy
38
The four critical areas to focus on are fiscal belt-tightening, improving
the business climate, complementing anti-inflati...
Political Economy Constraints.
• The Modi government will be driven by its economic and
development agenda.
• India is str...
Key Economic Ratio’s & Long-term Trends.
June 17, 2014Mohan Guruswamy
41
Cost of Big Ticket Expansion & Modernization Plans till 2024.
 India’s largest city is Mumbai, with a population of 12.5 ...
Balance of Payments & External Situation.
June 17, 2014Mohan Guruswamy
43
June 17, 201444Mohan Guruswamy
Political options available to the BJP.
• It is capable of hard decisions, both because of the
temperament of Modi, but be...
June 17, 201446Mohan Guruswamy
Increasing urbanization. An economic growth
challenge & opportunity
June 17, 2014
47
Mohan Guruswamy
Where will India’s growth come from?
June 17, 2014
48
Mohan Guruswamy
Oil & Gas infrastructure expansion.
June 17, 2014
49
Mohan Guruswamy
The implications of India’s urbanization.
June 17, 201450Mohan Guruswamy
June 17, 201451Mohan Guruswamy
MOHANGURU@GMAIL.COM
Thank you!
June 17, 2014Mohan Guruswamy
52
June 17, 201453Mohan Guruswamy
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MEET INDIA - A SHORT CONDUCTED TOUR OF THE WORLD'S MOST COMPLEX AND AMONG ITS FASTEST GROWING ECONOMIES.Sener

  1. 1. A SHORT CONDUCTED TOUR OF THE WORLD’S MOST COMPLEX AND AMONG ITS FASTEST GROWING ECONOMIES. MOHAN GURUSWAMY Meet India! Mohan Guruswamy June 17, 2014 1
  2. 2. Modern India now has over 2000 ethnic groups. Modern Indian languages have evolved from all the world’s four language families. Indo-European, Dravidian, Austro- Asiatic and Tibeto-Burman. India has 1652 individual mother tongues. The 2001 Census tells us that 30 languages are spoken by over a million each, and 122 by over 10,000 each. India has almost 1.2 billion people, and the Union of India consists of 32 States and Union Territories. The biggest of these is Uttar Pradesh with a population of 199.6 million or 16.49% of India’s. It is as big as Brazil. The smallest political unit is Lakshadweep which has just 64,000 (0.01%). Quite clearly the omnibus term India, incidentally derived from the name of a river that hardly flows through it, masks a diversity of nations. In late 2012 India became the world’s third largest economy in PPP terms and has grown at an average rate of over 7% since 2000. Between 2008-11 it grew at more than 9%. In consonance with global trends India’s growth also has tapered off these past two years. Clearly it’s a country of great heterogeneity and complexity. Its diversity makes it unsuitable for any other form of government but DEMOCRACY. Meet India! June 17, 2014 2 Mohan Guruswamy
  3. 3. The once and future world? Major world economies from 0-2005. June 17, 2014Mohan Guruswamy 3
  4. 4. A history of World GDP’s (1990 $ PPP) June 17, 2014Mohan Guruswamy 4
  5. 5. The brave new world to come! June 17, 2014 5 Mohan Guruswamy
  6. 6. June 17, 2014Mohan Guruswamy 6
  7. 7. June 17, 2014Mohan Guruswamy 7 The world at the end of the current decade.
  8. 8. -WORLD GDP over the past 12 months was about $65 trillion. In the year to September 2013, global output will be about $10 trillion bigger, according to the IMF's projections.* -But where will that next $10 trillion be added? That depends on the size of a country's economy, its growth rate and the appreciation of its real exchange rate. Focusing on any one of those things, to the exclusion of the others, can be a misleading guide to a market's potential. -For example, China's economy in 2013 will still be smaller than America's. But because it is growing so fast, it will add $1.65 trillion compared to America's $1.43 trillion. Japan—a slow-growing economy—will contribute $410 billion, less than Russia ($698 billion) or Brazil ($461 billion). But because Japan is so big, it will still contribute more than India ($392 billion). Where will the next $10 trillion of GDP come from? June 17, 2014 8 Mohan Guruswamy
  9. 9. Goldman Sachs predictions of GDP’s till 2050. June 17, 2014Mohan Guruswamy 9
  10. 10. Source: http://www2.goldmansachs.com/insight/research/reports/99.pdf The stuff our dreams are made off? June 17, 2014Mohan Guruswamy 10
  11. 11. BRIC’s will be bigger than G-6 by 2050. (In 2003 US $ bns.) June 17, 2014Mohan Guruswamy 11
  12. 12. June 17, 2014Mohan Guruswamy 12 WGDP growth since 2004.
  13. 13. June 17, 2014Mohan Guruswamy 13
  14. 14. Whatever happened to Japan? June 17, 2014Mohan Guruswamy 14
  15. 15. June 17, 2014Mohan Guruswamy 15 The story of the pyramids.
  16. 16. June 17, 2014Mohan Guruswamy 16 Why everybody is excited about India?
  17. 17. June 17, 2014Mohan Guruswamy 17 India’s late surge!
  18. 18. India’s burgeoning middle-class. June 17, 2014Mohan Guruswamy 18
  19. 19. June 17, 2014Mohan Guruswamy 19 China’s aging problem. It will get old before it gets rich. Life expectancy has more than doubled from 35 in 1949 to 75 today, a miraculous achievement. Meanwhile, the fertility rate has plummeted to 1.5 or lower, far below the 2.1 needed to keep a population stable. Cai Fang, a demographer at the Chinese Academy of Social Sciences, says the country will have moved from labour surplus to labour shortage at the fastest pace in history. In 2011, its workforce shrank for the first time, years before anyone had predicted. Japan reached a similar turning point in about 1990. Ominously for China, that was just before its economy sank into two stagnant decades. By then, its living standards were already at nearly 90 per cent of US levels. In purchasing power parity terms, China’s per capita income is still below 20 per cent. “There’s now no doubt,” says Professor Cai. “China will be old before it is rich.”
  20. 20. India’s growing workforce. June 17, 2014Mohan Guruswamy 20
  21. 21. June 17, 2014Mohan Guruswamy 21 Structure of the Economy
  22. 22. The Poverty Map of India. June 17, 2014Mohan Guruswamy 22
  23. 23. What are India’s grim realities? June 17, 2014Mohan Guruswamy 23 Reality 1. 62% of agricultural land is rainfed. 64.8% of the population is linked to agriculture for livelihood either as cultivators or as agricultural laborers. Rural workforce in 2001 about 250 mn. Reality 2. In 2001, 260.3 mn or 26.1% below poverty line of 2400 calories per day or Rs. 328 per month (rural) and Rs.454 per month (urban). Reality 3. 83.5% of all households (176.5 mn) below median per capita of Rs.17,736 per annum. Income inequality –Gini increasing.
  24. 24. What are India’s grim realities? - 2 June 17, 2014Mohan Guruswamy 24 Reality 4. Regional imbalances growing. Reality 5. 34.6% illiterate. Reality 6. Employment in organized sector stagnating at around 31 mn for past 5 years. Government employs 19.3 mn or 69%, while PSU’s & Pvt. Sector employs only 10.65 mn. Reality 7. Government capital expenditure for development now down to less than 15% of budget.
  25. 25. June 17, 2014Mohan Guruswamy 25 The Greatest Show on Earth!
  26. 26. Not a bad performance at all! June 17, 2014Mohan Guruswamy 26
  27. 27. Improving CAD. June 17, 2014 27 Mohan Guruswamy
  28. 28. A banking crisis ahead? June 17, 2014Mohan Guruswamy 28
  29. 29. The high cost of populism. June 17, 2014Mohan Guruswamy 29
  30. 30. A snapshot of the economic crisis. June 17, 2014Mohan Guruswamy 30
  31. 31. June 17, 2014Mohan Guruswamy 31 India’s International Trade.
  32. 32. June 17, 2014Mohan Guruswamy 32 The growing importance of Asia to India.
  33. 33. June 17, 2014Mohan Guruswamy 33 The nature of India’s International Trade.
  34. 34. June 17, 2014Mohan Guruswamy 34 India’s energy scenario.
  35. 35. June 17, 2014Mohan Guruswamy 35 A Petroleum Products Exporter!
  36. 36. June 17, 2014Mohan Guruswamy 36 BJP’s Main Economic Drivers.
  37. 37. Urbanization as an Economic Driver. June 17, 2014Mohan Guruswamy 37
  38. 38. Railways as an Economic Driver. June 17, 2014Mohan Guruswamy 38
  39. 39. The four critical areas to focus on are fiscal belt-tightening, improving the business climate, complementing anti-inflation efforts and sustaining the improvement in the current account deficit. The deficit is forecast to come in at around 4.6% in the 2013-2014 financial year ended in March 2014, down from 4.9% in 2012-2013 and 5.8% in 2011-2012. India recorded a Current Account Deficit of 1.70% of GDP in 2013. The CAD/GDP ratio in India averaged -1.45% from 1980 until 2013, reaching an all time high of 1.50% in 2003 and a record low of -4.70% in 2012. . If the government chooses to expedite capital spending to orchestrate a cyclical turn in the investment cycle and boost long-term growth, the short-term casualty will be the Debt/GDP ratio, Improving the business climate should be the anchor of the new government's agenda. June 17, 2014Mohan Guruswamy 39 The Immediate Economic Priorities.
  40. 40. Political Economy Constraints. • The Modi government will be driven by its economic and development agenda. • India is straining to expand its domestic Savings/GDP ratio, which has been declining in the past few years. • It has evolved into a high subsidy regime in the past decade and it will be difficult to roll back on this, given the nature of mandate of the Modi government. But it will have to bite the bullet now. • It will seek closer relationships with countries it can realize capital inflows. Only two countries are capable of meeting India’s needs with capital and technology. Japan and China. But Japan is not entirely a free agent. • India’s traditional strategic autonomy considerations will condition it not to get into any strategic relationships. • While the USA is an important player in geo-strategic terms, it is not capable of the volumes of investment India needs. The USA is habituated to being intrusive. June 17, 2014Mohan Guruswamy 40
  41. 41. Key Economic Ratio’s & Long-term Trends. June 17, 2014Mohan Guruswamy 41
  42. 42. Cost of Big Ticket Expansion & Modernization Plans till 2024.  India’s largest city is Mumbai, with a population of 12.5 million, closely followed by Delhi, with a population of 11 million. Overall, there are more than 50 urban areas in India with a population of more than one million people. Water and sanitation modernization. $50 billion.  New cities program. $300 billion  The National perspective plan envisions about 150 million acre feet (MAF) of water storage along with building inter-links. These storages and the interlinks will add nearly 170 million acre feet of water for beneficial uses in India, enabling irrigation over an additional area of 35 million hectares, generation of 40,000 MW capacity hydro power, flood control and other benefits. Cost $60 billion.  4000 kms of high speed railway network. $ 120 billion.  Capital expenditure on Defence. $150 billion.  Expansion and modernization of highway and road network. $120 billion.  Additional 150,000 MW of power generation capacity. $800 billion.  TOTAL: Over $1.6 trillion June 17, 2014 42 Mohan Guruswamy
  43. 43. Balance of Payments & External Situation. June 17, 2014Mohan Guruswamy 43
  44. 44. June 17, 201444Mohan Guruswamy
  45. 45. Political options available to the BJP. • It is capable of hard decisions, both because of the temperament of Modi, but because it is a right of center and market friendly government. • It will be driven by its economic and development priorities, and hence most likely to compromise for these goals. • It can reset India-China relations. • It will reset India-Japan relations. June 17, 2014Mohan Guruswamy 45
  46. 46. June 17, 201446Mohan Guruswamy
  47. 47. Increasing urbanization. An economic growth challenge & opportunity June 17, 2014 47 Mohan Guruswamy
  48. 48. Where will India’s growth come from? June 17, 2014 48 Mohan Guruswamy
  49. 49. Oil & Gas infrastructure expansion. June 17, 2014 49 Mohan Guruswamy
  50. 50. The implications of India’s urbanization. June 17, 201450Mohan Guruswamy
  51. 51. June 17, 201451Mohan Guruswamy
  52. 52. MOHANGURU@GMAIL.COM Thank you! June 17, 2014Mohan Guruswamy 52
  53. 53. June 17, 201453Mohan Guruswamy

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