India has experienced high economic growth over the past 25 years, averaging around 6-8% annual GDP growth. Literacy and living standards have greatly increased over this period as poverty has declined. India is now the third largest economy and is projected to become the second largest, overtaking Japan, by 2019. The growth has been domestically-led and consumption-driven, making India more insulated from global downturns. However, governance and public institutions have failed to keep pace with economic growth, posing challenges. Still, with a large middle class expected to grow to around half the population, India's future as a globally influential economic power appears bright.

2. INDIA AND ITS
GROWTH
“Making the world to turn towards
it”

3. Even though the world has
just discovered it, the India
growth story is not new
It has been going on for 25 years

4. What is the India
story?

5. 28 years of high growth
1.0
3.5
6.0
8.9
Average annual GDP growth
0
2
4
6
8
10
1900-1950 1950-1980 1980-2002 2002-2007
(%)

6. Literacy is rising
Source: Census of India (2001)
17
52
65
80
0
20
40
60
80
100
1950 1990 2000 2010 (proj)
(%)

7. When middle class is 50% then the politics will also change
Source: The Consuming Class, National Council of Applied Economic Research, 2002
65
220
368
8%
22% 32%
0
100
200
300
400
1980 2000 2010
(m)

8. Poverty is declining
46
26
16
1% of the people have
been crossing poverty
line each year for 25
years
Equals ~ 200m
0
10
20
30
40
50
1980 2000 2010
(%)

9. Per capita income gains
Source: World Bank
US$ ppp
20053,051
1980
1,178

10. India is now the 3rd largest economy
It will overtake Japan
between 2017 and 2019
to become the 2nd largest

11. The India model is
unique

13. Implications of India model
‘Domestically led’ means:
■ Insulation from global downturns
■ Less volatility
■ We will come out of the global crisis
faster

15. Implication of India model – Consumption led
41%
45%
59%
U.S.
China
Brazil
India
33%
People Friendly:
Consumption as % of GDP
People Friendly, Less inequality:
Gini Index
58%
42%
64%
Europe
China
India
Will India become the next big consuming economy after the U.S.?

16. Rise of globally competitive Indian companies

17. India has a vibrant private space
■ 100 Indian Companies have market cap of US$ 1bn

18. India has a vibrant private space
■ 100 Indian Companies have market cap of US$ 1bn
■ 1,000 Indian Companies have received foreign
institutional investment

19. 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

20. 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

21. 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

22. 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)

23. Public space is a problem
We have
■ Dynamic democracy with
honest elections
■ Free, lively media and press
But we also have
Poor governance!

24. Governance Failures
 Not the minister caught with a bribe
 1 out of 4 school teachers absent in
government schools
 2 out of 5 doctors absent in primary health
centers
 Land titles
 Etc

25. 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
■ Forgoting the human values
■ money
■ Position

26. Intersting fact
“When 300 million Indians speak a word in a
certain way, that will be the way to speak it.”
Professor David Crystal
Cambridge Encyclopedia of the English Language

27. Per capita income
2,100
3,050
5,800
16,800
37,000
On a ppp basis
2000 2005 2020 2040 2066
0
10
20
30
40
($000)

28. 50% 50%
India will gradually turn middle-class
8%
22%
32%
1980 2000 2010 2020 2040
West of the
Kanpur-
Chennai line
East of the
Kanpur-
Chennai line
Chennai
Kanpur-

29. 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

30. Role of Religion
India’s pluralism, diversity
and tolerance
Hinduism
■ Spiritual entrepreneurialism: Gurus
■ No hierarchy:
Every Brahmin thinks he is the Pope
■ 300 million gods:
Lack of theological narcissism
■ Nasadiya Temper85%
Hindu
12%
Muslim
2%
Sikh
1%
Christian

31. Elephant and not Tiger
■ India got democracy before capitalism and this has made
all the difference
■ It is slower than China but its path is surer
■ However, an elephant at 8% growth is a formidable beast
■ We have waited 3000 years for this moment
■ India is more likely to preserve its way of life

32. The Wise Elephant

34. JAI HINDAJAI HINDA
VANDE MATARM