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High Commission of India London Presentation by High Commissioner Dr. J. Bhagwati Dialogue With India Series II India House, May 21 2013.

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Presentation on theme: "High Commission of India London Presentation by High Commissioner Dr. J. Bhagwati Dialogue With India Series II India House, May 21 2013."— Presentation transcript:

1 High Commission of India London Presentation by High Commissioner Dr. J. Bhagwati Dialogue With India Series II India House, May

2 Kamini Banga, Distinguished guests, my Lords, Ladies and Gentlemen, At the outset, I want to thank Kamini for taking the initiative to bring us all together today. Kamini and I were in the same Physics (Hons) class in Delhi University. She was in Miranda House an all-girls college and I was in St.Stephen’s an all-boys college. The University decided to put the Physics students of our two colleges together since at that time Honours students had their classes in the Physics Department in Delhi University. I cannot say how much physics the students learnt but there seemed to be a lot of chemistry between the boys and girls It is a cliché yet true that India lives in several centuries. It is also a cliché that whatever you say about India or Indians, the opposite is also usually true. For example, while 26% of our population is still illiterate, we have very sophisticated Space and Nuclear Power Programmes I would like to begin with a historical overview of the Indian economy. And, I will use both graphs and tables 2

3 I want to emphasise that although I will go back 300 years in time this is not to make excuses for India or make a case for Indian exceptionalism I will also present projected growth rates for India, other emerging economies and developed countries. Again, this is not to divert attention from the many shortcomings and difficulties that we are currently facing Incidentally, to the extent possible, for the supporting data I have used multilateral sources such as the IMF Inter-country comparisons can be questioned on the grounds that the underlying data is not comparable. In that sense a better way to evaluate India’s progress is to compare and contrast its economic indicators across time and not across countries 3

4 India’s ranking in world population and GDP over the last three hundred years India plus China had about half the world’s population and produced over 40% global GDP in the early 1800s India’s GDP share steadily declined over the next 150 years The two economies have raised their share of global GDP in last four decades 4

5 India is home to 1.2 billion people, which is about 17.4 % of the global population However, it accounts for only 5.4 % of world GDP Hence, India has some catching up to do 5

6 India is in Transition It is a relatively young country even though it has an ancient and continuous civilisation Historically there have been serious social and economic imbalances Employment guarantee law has given livelihood security to people at the bottom of economic pyramid Right to Information and our media has given voice and access to most citizens Current inconsistencies between intentions and outcomes are part of processes which will lead to enhanced transparency and hence improved governance 6

7 Share of World Population and GDP (PPP) Year IndiaChinaGermanyUK Japan USA % Share of Pop % Share of GDP % Share of Pop % Share of GDP % Share of Pop % Share of GDP % Share of Pop % Share of GDP % Share of Pop % Share of GDP % Share of Pop % Share of GDP B R E A K IN T R E N D Source: World Economy by Angus Maddison, OECD and IMF (2010 data)

8 PeriodIndiaChinaGermanyUKJapanUSA Break In Trend Break In Trend A Source: World Economy by Angus Maddison OECD and IMF ( data) Annual Average GDP Growth Rates (%)

9 Source: World Economy by Angus Maddison, OECD and IMF 8B

10 Year Per capita GDP Per capita GDP at constant Prices US $ A Source: Economic Survey 2012, Govt. of India India per capita GDP growth

11 India Per Capita GDP Source: Economic Survey 2012, Govt. of India 9B

12 Period Population growth rate GDP growth rateTrend %0.23 %Getting poorer %4.74 % Growing Richer 10A Source: World Economy by Angus Maddison OECD ( ) and Economic Survey 2012, Govt. of India ( ) India Average Annual Growth Rates

13 India Average Annual Growth Rates: Population and GDP% Source: World Economy by Angus Maddison, OECD ( ) and Economic Survey 2012, Govt. of India ( ). 10B GDP

14 Year Population (millions) Life expectancy (Years) Literacy rate (%) A Source: Economic Survey 2012, Govt. of India India Social Indicators

15 India Social Indicators Life Expectancy yrs Literacy Rate % Source: Economic Survey 2012, Govt. of India Population (millions) Life Expectancy, Literacy Rate 11B

16 Economic Indicators India & Emerging Economies IndiaBrazilChinaIndonesiaMexicoSouth Africa Population 2012 Millions1, , GDP nominal $ bn, 20121, , , GDP PPP $ bn Annual average growth rate %, Budget deficit % of GDP Current Account Balance % of GDP Source: IMF and US World Fact Book

17 Economic Indicators India & Emerging Economies IndiaBrazilChinaIndonesiaMexicoSouth Africa Cumulative FDI Inflows $ Bn, * Portfolio Investment $ Bn, * Investment Rate % of GDP Savings rate % of GDP Source: IMF and US World Fact Book *These numbers are not strictly comparable

18 Economic Indicators India & Developed Economies IndiaAustraliaGermanyJapanUKUSA Population 2012 Millions 1, GDP, Nominal $ bn, ,8241,5413,4005,9632,44015,684 GDP, PPP $bn, 20124, ,197.14,627.92, ,684.8 Annual average growth rate % Budget deficit % of GDP Current Account Balance % of GDP Source: IMF and US World Fact Book

19 Economic Indicators India & Developed Economies IndiaAustraliaGermanyJapanUKUSA Cumulative FDI Inflows $Bn, * Portfolio Investment $Bn, * Investment Rate % of GDP Savings rate % of GDP Source: IMF and US World Fact Book *These numbers are not strictly comparable

20 India Forex Reserves Figures in US Dollars Billions INDIA ChinaBrazilSouth Africa YearForeign Exchange reserves External debt (End March) FII net inflows FDI inflows YearFDI inflows FDI inflows Source: RBI & OECD

21 GDP Growth Projections next 5 Years(%) India & Emerging Economies YearIndiaBrazilChinaIndonesiaMexicoSouth Africa A Source: IMF

22 GDP Growth Projections next 5 Years (%) India & Developed Economies YearIndiaAustraliaGermanyJapanUKUSA A Contd. Source: IMF

23 GDP Growth Projections Next 5 years Source: IMF GDP Growth Rates % 18B

24 Trade in Goods & Services IndiaChinaFranceGermanyUKUSA GDP PPP $ Bn, 20124, ,405.72,254.13,197.12, ,684.8 Exports of Goods $ Bn , , ,612 Exports of Services $ Bn Imports of Goods $ Bn , , ,357 Imports of Services $ Bn Total Trade Goods & Services $ Bn Source: IMF, IAEA & Space foundation

25 Defence and Technology Budgets IndiaChinaFranceGermanyUKUSA Defence Budget 2011 $ Bn Nuclear Power generation capacity 2013 MW 4,39117,83463,13012,0689,246101,465 Space Program Budgets 2009 $ Bn Source: IMF, IAEA, Space foundation

26 Year Foodgrain production (Million Tonnes) Finished Steel Production (Million Tonnes) Cement production (Million Tonnes) Coal production (Million Tonnes) Electricity Generated (Billion KWH) Estimates Source : RBI & Economic Survey 2012, Govt. of India India’s Key Output Indicators

27 India – Opportunities Infrastructure  Envisaged investment of $ 1 trillion during  World’s third largest road network 4.24 million kms  Road freight volumes increasing at CAGR 9.08 % p.a.  Vehicle population increasing at CAGR % p.a. 22 Source: India Brand Equity Foundation

28 India Opportunities Infrastructure  Under NHDP-VI 1000 km of expressways envisaged with investment of $ 3 billion  Expansion of port traffic from current 800 MT to 2500 MT by 2020; investment of $ billion during  India’s urban population projected to reach 600 million by

29 Annual growth rate of 20%, expected to reach $ 280 billion by 2020 (The Indian healthcare sector is estimated to reach US$ 100 billion by 2015, growing at 20% year-on-year (y-o-y), as per rating agency Fitch) Central Government budget on healthcare to double to 5% of GDP during Cost efficient medical tourism destinations expected to grow at Compound Annual Growth Rate of 27 % during Source: India Brand Equity Foundation India Opportunities Healthcare

30 India Opportunities Manufacturing The small and light commercial vehicle segment expected to grow at 18.5% Compound Annual Growth Rate (CAGR) over next 5 years Auto component industry expected to reach a turnover of $ 113 billion by 2020 from $ 43 billion currently Radial tyre market expected to reach $ 7.3 billion by 2015 growing at CAGR 21% 25 Source: India Brand Equity Foundation

31 India Opportunities Retail  Food industry currently at $ billion growing at CAGR of 17 %  Retail sector currently at $ 350 billion growing at CAGR 20% 26 Source: India Brand Equity Foundation

32 India Opportunities Media and Entertainment  TV sector revenue $ 6.8 billion in 2012 growing at 12.5%  Largest film industry in the world, revenue $ 2 billion in 2012  World’s third largest internet market with a user base of 120 million, set to increase to 370 million users by Source: India Brand Equity Foundation

33 India Opportunities Biotechnology & Pharma Biotech industry currently at $ 4.3 billion is expected to reach $ 11.6 billion by 2017 Pharma sector expected to grow to $ 74 billion by 2020 from current level of $ 11 billion sales 28 Source: India Brand Equity Foundation

34 India Opportunities Education, Research and Development(ER&D) Education market size expected to reach $ 112 billion by 2015 Leading offshore destination in delivering engineering R&D services with a market global share of 22% 29 Source: India Brand Equity Foundation

35 IssuesIndications Inflation  Chronic food inflation  Infrastructure bottlenecks increase cost of production 30 India Risks ahead

36 31 IssuesIndications Infrastructure  Power shortages  Availability of coal linkages  Road, Rail and Port congestion  Delays in environmental clearances  Rapid Disorderly Urbanisation India Risks Ahead

37 IssuesIndications Balance of Payments  Crude oil imports  Gold imports 32 India Risks ahead

38 IssuesIndications Regional Inequalities  Low Human development indices in highly population states  Poor infrastructure in natural resources rich states 33 India Risks ahead

39 34 IssuesIndications Imparting of Skills to youth  Young population has high aspirations  Challenge to upskill 500 million youth  Social consequences of unmet aspirations India Risks ahead

40 35 IssuesIndications Project Implementation  Infrastructure unable to catch up with growth  Delays in legal processes  Locking up of investments in incomplete projects  Adverse impact on investor confidence India Risks ahead

41 India Risks ahead IssuesIndications Corruption  Public uprisings  Paralysis in decision making 36

42 Several Indian corporates have commented in the last few years that the prospects for investment in India are not sufficiently attractive. Some major business houses has invested in emerging economies and developed countries. Several of these debt driven investments now face difficulties because growth in the countries concerned was less than what was projected at the time the investments were made. This is not to suggest that Indian firms made a mistake by investing outside India. Hindsight is always 20/20 The bottom line in India as elsewhere is: No Risk No Gain. We should remind ourselves that when it comes to India it makes sense to take a longer term view, particularly with respect to investments in manufacturing and infrastructure 37

43 Thank You 38


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