India is changing paving the way for a new India, The Country which has a billion plus population are beginning to change their mindset as they feel suffocated with the present set up. Indian Affairs, Network 7 Media Group’s news magazine in an extensive with the tier 1 & tier 2 cities & the rising Indian middle class spotted their apathy, frustration & disappointment with the present administration. Over the last 7 years, India is discredited & lost its balance. Indian Administrators are clueless what they should do as they are too busy in petty politics & daily TV opera which bring out startling stories of how our rulers are looting the country. India is governed by some of the finest laws with widespread ramifications, but as india is evolving, the founding fathers of the constitution perhaps did not realize that Indian Rulers can be so arrogant & greedy that even laws & scriptures cant make any difference.
Indian Affairs, Asia’s biggest news title has been relentlessly pursuing the need for a change in approach as the old order is beginning to crumple & political compulsions have dominated economic growth. We have no options, but to leave with its reality. Over the last few years, Indian Affairs & Breakfastnews has been at the centre of debating the uneasy questions & posing uncomfortable questions as Network 7 Media Group refuses to compromise on journalism ethics & principles of propriety. Indian Affairs has exposed the real villions of Indian polity who try to subvert the system for their personal gains. Our attempt to bring truth & credibility has given discomfort to many in the corridors of power & bunch of jokers at the helm of administration, but our struggle for bringing the truth remain the principle mantra, how much opposition we face. Indian Affairs is restless & in an attempt to cleanse the system through journalism has also discovered that India today is not the same as it was a decade a back. International Community today is looking at India with a much bigger anticipation as the past few years have brought disrepute following scams after scams paralyzing the policy reforms. Domestic turbulence & apathy towards the system have brought people to the streets as they protest that their rights are snatched away. India today is a new india. With these background in view, Indian Affairs, Network 7 Media Group’s media outfit is organizing the high profile & high voltage debate, The 4th Annual India Leadership Conclave & Indian Affairs Business Leadership Awards 2013, under the theme New India, Agenda For Change.
We feel that India must balance competing interests such as the rights of the poor and the need for land to set up industries to help boost its economy and what the government needs to do to boost economic expansion and keep its widening budget and current-account deficits in. Growth has been slowing, mainly because investments have slowed. We have been arguing for a while that the main reasons for slowing growth are structural in nature, more than lack of financing. Things like getting projects approved–and cleared and implemented–really seem to have slowed down. That is the top priority, to find a way to balance competing interests: Environmental interests against growth; land rights, especially among the poor. The Truth is India needs to grow faster than this. The current rate is too low. Indian Affairs forecast that India will make 5.9% expansion in 2013 and 6.4% in 2014. We do envisage some recovery in this fiscal year and a gradual pickup over the next year or two. If they are able to address the structural challenges, the economy should start to gradually turn around. India we think is not necessarily under taxed but we think is under resourced. If you compare India with other Asian countries, it doesn’t have enough general government revenue. And that is a source of vulnerability. It won’t surprise that the concern about inflation, again from a current-account standpoint and from investment-sentiment standpoint, is real. We think it’s important for the RBI to continue to keep a close eye on inflation. consumer price inflation is up over 10%.Most people seem to think that the slowdown in investments is driven more due to structural issues than by tight financing conditions. Marginal movements in interest rates aren’t going to boost investments so much as addressing the broader structural regime.The government could use the cabinet committee on investments to get investments going, boost growth, and give the RBI room to cut rates.
Indian Affairs feel that, when it comes to food security, India fares poorly in global rankings. According new food security index that looks at food affordability, availability as well as its quality and safety, India ranked 66th out of 105 countries. According to the Global Food Security Index, released earlier this week by the Economist Intelligence Unit, the magazine’s research group, India scored especially low when it came to the affordability of food. India has a terrible record when it comes to malnourishment, especially with children. Is the solution to greater food security growing more food grains?, that is a bigger question mark. The Congress party’s ambitious food security law, and main campaigning plank, guarantees cheap food grains to about 70% of the Indian population, or roughly 900 million people, but was put on hold once again last month after more than a year going through Parliament.The Land Acquisition, Rehabilitation and Resettlement Bill: The bill that seeks to address the mechanism of buying land for public purposes, including compensation levels for displaced farmers. It is pending approval in the Lok Sabha, India’s lower house of Parliament, where it was introduced two years ago.Lokpal Bill: The bill, which proposes an independent federal ombudsman and parallel anti-graft agencies at state level, was passed in the lower house in December 2011. The recommendations still need approval from the federal cabinet before parliament can even start discussing them.Tough Rape Law: This was considered after huge protests following the fatal gang rape of a young woman on a moving bus in Delhi at the end of last year.The bill that aims to strengthen the country’s law on sexual assaults against women with stringent punishments for offences like rape, stalking, voyeurism and acid attacks, was cleared by Parliament in March. The law, however has come under scrutiny by rights groups. They say it opens the way to more abuse and doesn’t address marital rape, or rape against men.
One overriding fact will define the coming decade for India: the high probability that it will continue to achieve economic growth at an annual rate of 9 per cent, give or take a percentage point. That will compare with an average of about 7.5 per cent for the first decade of the new century, and about 6 per cent in the last decade of the 20th.In grand, macro-economic terms, that does not sound like a seminal shift, for GDP will go up from Rs 60 lakh crore today (about $1.3 trillion) to 2.2 times that figure a decade from now. India’s GDP in 2020, at just under $3 trillion at today’s prices and exchange rates, would be less than two-thirds of what China has already achieved in 2009: $4.6 trillion.
India and China, with a combined population of 3 billion people, will reclaim their positions as economic giants in this century. Napoleon once said, "Let China sleep, for when China wakes up, she will shake the world." China has woken up. It is investing nearly half its GDP--that's simply unprecedented. No other economy, at no other time in history, has invested capital on that scale. To call this "hyper"-investment is like comparing the Sun's luminosity to a streetlamp. At the peak of its economic miracle, Japan was investing only 30% plus of its GDP--but China is doing 50%!
Over 200 years of economic experience tells us that hyper-debt-fuelled-investment creates a bubble and ends in a dreadful collapse. But China has consistently defied all such prophesies of doom. Frankly, it may not be too bizarre to believe that China could be scripting a new economic logic. Traditional theory says that investment should be "sustainable," that is, it should be "matched" by rising consumption. But what if you pump so much capital into your economy--similar to putting extra fuel into a rocket--that you "escape" the gravitational pull of low thresholds? Especially if the bulk of your capital is spent on infrastructure (roads, railways, schools, irrigation canals, dams, hospitals, ports), as against factories which produce toys and televisions? This could be the Chinese masterstroke, the single discontinuity that could defeat 200 years of economic wisdom. Ultra-big manufacturing factories may create waste and over-capacity, but mammoth infrastructure could trigger higher productivity and the ability to create wealth. So it may be a fatal mistake to look at China's investment spree in a single lump of factories-plus-infrastructure. Huge capital spending on life-enhancing social assets, like schools, research labs and hospitals, may actually empower people. By rapidly educating its workforce, by brilliantly executing immensely large projects, by importing expertise and dollars in a shrinking world, China could be creating a "shower of wealth and productivity" such that consumption eventually "trickles through" into the bubble.
But 200 years of political economy have also taught us that genuine enterprise and innovation takes place only when people are free, when individual genius soars unfettered. But China is challenging that axiom too--once again, it is using ambition and infallible execution to trump democracy. It believes that people will trade wealth for freedom--for nearly three decades, this belief has held good and gathered in strength. So will China drive the final nail into the coffin of history? The jury is out on this one.
Now look at India--that's a classic textbook case. India's structure is an uncanny prototype of a "promising" economy. Well above half its GDP--nearly 55%--is consumed by over a billion people, giving it the kind of organic strength that transformed the economies of the U.S., U.K., Germany and Japan. Just its rural economy is made up of 800 million people spending over $425 billion. This, when agriculture's share is declining, manufacturing is rising and services are already more than half the GDP--again, a classically attractive mix. Like China, India saves nearly 40% of its GDP, but the bulk comes from households (as against China, where state-owned corporations with somewhat contrived accounting contribute more than households). India's resource consumption has decreased for every incremental dollar of GDP since 1991 (as against China, which was using three times more resources per dollar of GDP than India). India's economy is healthily private, with state-owned corporations accounting for less than a tenth of the output. At slightly over a trillion dollars, its stock market capitalization is about equal to its GDP--another beautifully balanced economic attribute. Its foreign reserves are over a quarter of a trillion dollars--neither uncomfortably high, nor low. Its bank credit is roughly equal to half its GDP (as opposed to over 150% for China), while bad loans are at an astonishingly low 2-3% in a world devastated by toxic financial assets (recall that China's bad debts are precariously estimated at between 30-50%, the large range itself betraying a huge risk of fuzzy estimates).
The Indian rupee largely floats against world currencies--it danced in a 25% band after Lehman's collapse in 2008, without disrupting anything. A red rag is India's weak government budget and rather high public debt at 80% of GDP--but here again, the highly vulnerable dollar loans are paltry by Asian standards. India is in a very sweet demographic spot, being the youngest country in the world--half a billion people are less than 25 years old, giving it a unique "demographic dividend" among peers. Ten of the world's 30 fastest growing cities are in India--its urbanization rate, at 30%, is accelerating. With 350 million people displaying a reasonable proficiency in English, it's the largest English-using country in the world. Its judicial system is robustly based on English Common Law. It's a genuine, albeit imperfect, democracy.
Continuing to infuse physics into economics, India's growth is like "wave theory"--closer to the epicenter, the waves are tiny, densely packed and look really small. They start as an undetectable wobble, but soon become a ring of thrusting circles, growing in size and strength with each outward lunge. That could be India's model--dotted with micro changes, the atoms picking up energy from each other, pushing and jostling those around them to move faster, until all the particles begin whizzing around kinetically, pumping up a balloon of spreading prosperity. But just as lack of democracy is the Achilles' Heel for China, half-hearted governance by a dysfunctional state--especially in education, health, agriculture and infrastructure--is the "Big If" for India. Once again, the jury is out here.
Finally, there is another, enormously enigmatic factor at work. It's not about China versus India, but China and India versus the rest of the World. It's for the first time in human history that trillions of dollars are being added to billions of people. For instance, America and China have roughly the same landmass, but China has 13 times more people than what America had a century ago when it began its economic miracle. Earlier, in countries with 50-150 million people, many people would get very rich quite rapidly.
In global rankings, too, there will be relatively small shifts — India will have become bigger than Russia and Brazil (two of the BRIC economies), and should also overtake Canada and Spain. It will therefore become the eighth largest economy in the world, as against the twelfth largest today. And per capita income will have doubled to become a little better than where Sri Lanka’s is today!
These are substantial changes, but essentially incremental, and therefore none of them earthshaking. India’s share of global GDP, for instance, will be only slightly better than 4 per cent even in 2020 — well short of the 24 per cent that prevailed more than three centuries ago, and not much better than the 3.8 per cent of 1952! The more exciting story, therefore, will lie in the scale change that will become evident in specific markets. We have seen over the past decade how this works — the number of new mobile phone connections has gone from 0.1 million per month in 1999 to 10 million now, an increase of a hundredfold. And total mobile connections have gone from less than 10 million to over 500 million.What has happened in mobile phones will happen in many fields over the coming decade. Chiefly because the number of households with a monthly income of Rs 25,000 and more should more than treble, from about 30 million today to 100 million by 2020, with their average income becoming at least twice what it is today. In other words, the spending power of the middle class will multiply six-fold. Depending on which way spending patterns move, some markets will grow tenfold in the next decade. That kind of scale change will be the real story — mimicking the software business, whose exports have grown from $5.7 billion 10 years ago to about $50 billion now. So when you pick the next crop of stars in the world of business, think carefully. It’s going to be a disruptive decade ahead for other markets too: in metals, energy and even agro-commodities, as Indian demand starts looking more like what Chinese demand has been in the recent past. If this explains why China has been busy in a one-country race to grab the world’s resources, wherever they may be, perhaps it is time India took the natural resource game a little more seriously. Domestically, the new game in town will be manufacturing. As the domestic market grows, domestic manufacture cannot be far behind. The problem, of course, is that in the age of climate change, this becomes highly problematic. More immediately, expect bitter battles over land. The harsh fact is that India has 350 people per square kilometre — something like eight or 10 times the global average. By the end of the decade, it could be 400 people per sq km. Typically, then, if a large industrial project or power plant wants 5,000 hectares of land (or 50 sq km), it could displace as many as 20,000 people. Less, if the land is in an under-populated area, but still substantial. Assume the setting up of dozens of such projects: in power alone, the country will need the equivalent of 40 ultra-mega projects of 4,000 mw each; in steel, domestic consumption could go up from 46 million tonnes today to perhaps 150 million tonnes. To feed such demand and to make way for such projects, we are talking of displacing millions of people in the coming decade. The question of whether this is feasible, and where the displaced people are to go, will be one of the prime issues of the decade — especially in heavily populated states like West Bengal, where population density is thrice as high as the national average (over 1,000 people per sq km).
Indian Affairs feel that India will overtake China as the fastest-growing economy in the world. China will start ageing and suffering from a declining workforce, and will be forced to revalue its currency. So its growth will decelerate, just as Japan decelerated in the 1990s after looking unstoppable in the 1980s. Having become the world's second-biggest economy, China's export-oriented model will erode sharply - the world will no longer be able to absorb its exports at the earlier pace. Meanwhile, India will gain demographically with a growing workforce that is more literate than ever before. The poorer Indian states will start catching up with the richer ones. This will take India's GDP growth to 10% by 2020, while China's growth will dip to 7-8%. India will become the largest English-speaking nation in the world, overtaking the US. So, the global publishing industry will shift in a big way to India. Rupert Murdoch's heirs will sell his collapsing media empire to Indian buyers. The New York Times will become a subsidiary of an Indian publishing giant.In the 2000s, India finally gained entry into the nuclear club, and sanctions against it were lifted. By 2020, Indian companies will be major exporters of nuclear equipment, a vital link in the global supply chain. So, India will be in a position to impose nuclear sanctions on others.
India, along with the US and Canada, will develop new technology to extract natural gas from gas hydrates - a solidified form of gas lying on ocean floors. India has the largest gas hydrate deposits in the world, and so will become the biggest global producer. This will enable India to substitute gas for coal in power generation, hugely reducing carbon emissions and making Jairam Ramesh look saintly.India will also discover enormous deposits of shale gas in its vast shale formations running through the Gangetic plain, Assam, Rajasthan and Gujarat. New technology has made the extraction of shale gas economic, so India will become a major gas producer and exporter. Meanwhile, Iran's mullahs will be overthrown, and a new democratic regime will usher in rapid economic growth that creates a shortage of gas in Iran by 2020. So, the Iran-India pipeline will be recast, but in reverse form: India will now export gas to Iran.More and more regions of India will demand separate statehood. By 2020, India will have 50 states instead of the current 28. The new states will not exactly be small. With 50 states and a population of almost 1.5 billion, India will average 30 million people per state, far higher than the current US average of 6 million per state.China, alarmed at India's rise, will raise tensions along the Himalayan border. China will threaten to divert the waters of the Brahmaputra from Tibet to water-scarce northern China. India will threaten to bomb any such project. The issue will go to the Security Council.Islamic fundamentalists will take over in Afghanistan and Pakistan. The US will withdraw from the region, leaving India to bear the brunt of consequences. Terrorism will rise in India, but the economy will still keep growing. How so? Well, 3000 people die every year falling off Mumbai's suburban trains, and that does not stop Mumbai's growth. Terrorism will bruise India, but not halt its growth. India has made significant strides in economic development since independence, successfully making a mark on the global economic arena. The economy’s unprecedented growth, especially in the second half of the past decade, along with strong economic fundamentals, enthuse optimism among economists and businesses the world over about its growth prospects. While a host of factors supported the emergence of the high growth era for the Indian economy, focus on economic reforms and resurgence of entrepreneurship have been major growth enablers. Liberalisation, growing economies of scale of Indian enterprises, increased access to advanced technologies and growth in entrepreneurship have led to the economy emerging as a much sought-after destination for foreign investments. The private sector also played a crucial role in India’s progress on the high growth trajectory during the past decade. We believe that private businesses would continue to scale new heights during the current decade. We expect participation of the private sector in the infrastructure development, which has been one of the major inhibiting factors for India’s growth prospects, to increase substantially during the current decade. As the economy progresses ahead in the current decade, the private sector would encounter a dynamic environment encompassing new challenges and opportunities. Therefore, it, becomes imperative for businesses to track the Indian economy’s growth prospects and dynamics of the evolving macroeconomic environment to explore opportunities and overcome challenges.
India’s present, as summed up in the dismal figures – malnutrition, child mortality, poverty, farmer suicides, social unrest, etc – should make us weep for the pain that innocent people suffer needlessly. We have to do something to change this state of affairs. We have a choice and we have to choose. The question that naturally arises is this. Is it possible for a large economy to grow at 6 per cent a year for many decades? Yes. China has grown at an average rate of around 8 per cent a year for over 30 years since 1978. India could have started at least four decades before China did. If India had, it would have occupied the space that China occupies today in the world of manufacturing. China has India’s failed Nehruvian socialist policies to thank for at least a part of its success.What would India have been like had its leaders such as Jawaharlal Nehru and his daughter Indira Gandhi chosen to make India economically free? India would have been at least a middle-income country with a per capita income of around $10,000 per year.
The economy is now on the fulcrum of high growth, after grappling with the global economic crisis during the end of the past decade. The current decade is expected to play a crucial role in charting out India’s progress towards becoming a developed nation. Until date, the development of the economy has been skewed and it lacked inclusive growth. However, we believe that India’s success story is set to enter a new era of inclusive growth. During the current decade, significant progress would be visible in terms of growth percolating to a larger section of the society, an aspiration that has remained unaccomplished. Even the government at the center and the state levels are expected to make more concentrated efforts to channelise resources for growth in an inclusive manner. D&B’s “India 2020 Economy Outlook” is an endeavour to evaluate and analyse the prospects of the economy during the current decade. This report is an attempt to provide forecasts of key macroeconomic variables, growth prospects of some of the Indian states, identify certain parameters that will drive growth during this period and also attempts to chart out some of the major policy initiatives that would facilitate India’s economic journey. India today is one of the largest growing economies in the world, the stage for which was set during the last decade when India embarked on a remarkable growth phase. India emerged unscathed from the impact of the global financial crisis revealing to the world the inherent strong fundamentals that the Indian economy possesses. This has led to aspirations of achieving high and inclusive growth. The current decade is thus, expected to play a crucial role in determining India’s journey towards achieving this goal.In the publication ‘India 2020 Economy Outlook’, D&B attempts to evaluate and analyse the prospects of the Indian economy in achieving this goal during the current decade based on the fundamental strength of the economy. The forecasts for the current decade can help us to prepare for the future challenges and seize opportunities that lie ahead. The report is segmented into five sections covering forecasts for key macroeconomic variables, growth prospects for some of the Indian states, potential growth drivers of the economy, major policy initiatives that would facilitate India’s economic journey and growth concerns during the current decade, the highlights of which are given below;