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

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

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

5. India is home to 1. 2 billion people, which is about 17
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

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

7. Share of World Population and GDP (PPP)
Year
India
China
Germany UK
Japan
USA
% Share of Pop
% Share of GDP
1700
27.3
24.4
22.9
22.3
2.5
3.6
1.4
2.9
4.5
4.1
0.2
0.1
1820
20.1 16
36.6
32.9
2.4
3.8 2
5.2
3.0 1
1.8
1870
19.9
12.2
28.2
17.2
3.1
6.5
9.1
2.7
2.3
3.2
8.9
1913 17
7.6
8.8
8.3
2.6
5.4
19.1
1950
14.2
4.2
21.7 5
3.3
6.0
B R E A K IN T R E N D
1973
14.8
22.5
4.6
2.0
5.9
2.8
7.7 22
1998
16.5
5.0 21
11.5
4.3
2.1
21.9
2010
17.1
13.6
1.1
3.9
0.8
5.8
4.4
19.7
Source: World Economy by Angus Maddison, OECD and IMF (2010 data)

8. Break In Trend Break In Trend
Annual Average GDP Growth Rates (%)
Period
India
China
Germany UK
Japan
USA
0.38
-0.37
2.01
2.05
0.41
4.20
0.97
0.56
2.83
1.90
2.44
3.94
0.23
-0.02
0.30
1.19
2.21
2.84
Break In Trend
5.68
2.93
9.29
3.93
3.54
5.02
5.07
6.84
Break In Trend
1.76
2.00
2.97
2.99
7.20
10.00
1.5
2.5
0.66
2.4
Source: World Economy by Angus Maddison OECD and IMF ( data)

9. Annual Average GDP Growth Rates (%)
Source: World Economy by Angus Maddison, OECD and IMF 8B

10. Source: Economic Survey 2012, Govt. of India
India per capita GDP growth
Year
Per capita GDP
Per capita GDP at constant
Prices US $
142.28
177.78
200.32
214.24
286.60
407.24
719.86
Source: Economic Survey 2012, Govt. of India

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

12. Population growth rate
India Average Annual Growth Rates
Period
Population growth rate
GDP growth rate
Trend
0.46 %
0.23 %
Getting poorer
2.08 %
4.74 %
Growing
Richer
Source:
World Economy by Angus Maddison OECD ( ) and Economic Survey 2012, Govt. of India ( )

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

14. Source: Economic Survey 2012, Govt. of India
Social Indicators
Year
Population
(millions)
Life expectancy
(Years)
Literacy rate
(%)
359
32.5
18.3
541
45.6
34.4
839
58.7
52.2
1210
63.5
74.0
Source: Economic Survey 2012, Govt. of India

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

16. Economic Indicators India & Emerging Economies
India
Brazil
China
Indonesia
Mexico
South Africa
Population 2012 Millions
1,223
198
1,354
244
114 51
GDP nominal $ bn, 2012
1,824
2395
8,227
878
1,177
384
GDP PPP $ bn 2012
4684.4
2355.6
1216.7
1759
582.4
Annual average growth rate %,
7.23
3.57
10.06
5.31
2.31
3.48
Budget deficit % of GDP 2012
-5.6
+2.7
-1.6
-1.9
-2.8
-5.4
Current Account Balance % of GDP
-5.1
-2.2
+2.5
-2.7
-0.7
Source: IMF and US World Fact Book

17. Economic Indicators India & Emerging Economies
India
Brazil
China
Indonesia
Mexico
South Africa
Cumulative FDI Inflows
$ Bn, *
201
705
1029
185
343
134
Portfolio Investment
$ Bn, *
256
493
283
112
209
141
Investment Rate
% of GDP 2012 34 17 46 35 20 19
Savings rate % of GDP 2012 29 15 49 32 21 13
Source: IMF and US World Fact Book
*These numbers are not strictly comparable

18. Economic Indicators India & Developed Economies
India
Australia
Germany
Japan UK
USA
Population 2012
Millions
1,223 22 81
127 63
314
GDP, Nominal
$ bn, 2012
1,824
1,541
3,400
5,963
2,440
15,684
GDP, PPP $bn, 2012
4,684.4
970.8
3,197.1
4,627.9
2,336.3
15,684.8
Annual average growth rate %
7.23
2.99
1.25
0.86
1.76
1.82
Budget deficit % of GDP
2012
-5.6
-0.8
+0.1
-9.1
-7.7
-7.6
Current Account Balance
% of GDP
-5.1
-3.6
7.0
0.9
-3.5
-3.0
Source: IMF and US World Fact Book

19. Economic Indicators India & Developed Economies
India
Australia
Germany
Japan UK
USA
Cumulative FDI Inflows $Bn, *
201
515
927
225
1063
2547
Portfolio Investment $Bn, *
256
965
2835
1437
3469
8511
Investment Rate % of GDP 2012 34 28 17 35 14 16
Savings rate % of GDP 2012 29 25 24 32 10
Source: IMF and US World Fact Book
*These numbers are not strictly comparable

20. India Forex Reserves Source: RBI & OECD Figures in US Dollars Billions
China
Brazil
South Africa
Year
Foreign Exchange reserves
External debt
(End March)
FII
net inflows
FDI inflows
309.72
224.40
27.43
34.72
2008
175.1
45.1
9.0
251.98
224.49
-14.03
41.70
2009
114.2
25.9
5.7
279.05
260.93
32.39
33.10
2010
185.0
48.5
1.2
304.81
305.93
30.29
27.82
2011
228.6
66.7
6.0
294.39
345.81
17.17
32.95
2012
253.4
65.3
4.6
Source: RBI & OECD

21. GDP Growth Projections next 5 Years(%) India & Emerging Economies
Brazil
China
Indonesia
Mexico
South Africa
2013
5.68
3.02
8.04
6.3
3.39
2.85
2014
6.23
4.04
8.24
6.4
3.4
3.35
2015
6.63
4.13
8.51
6.44
3.43
2016
6.86
4.16
8.53
6.5
3.30
2017
6.92
8.50
3.11
Source: IMF

22. GDP Growth Projections next 5 Years (%) India & Developed Economies
Australia
Germany
Japan UK
USA
2013
5.68
2.96
0.61
1.58
0.69
1.85
2014
6.23
3.31
1.46
1.41
1.54
2.95
2015
6.63
3.05
1.32
1.05
1.84
3.56
2016
6.86
3.06
1.22
1.94
3.44
2017
6.92
3.23
1.28
1.19
2.08
3.34
Source: IMF

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

24. Trade in Goods & Services
India
China
France
Germany UK
USA
GDP PPP $ Bn, 2012
4,684.4
12,405.7
2,254.1
3,197.1
2,336.3
15,684.8
Exports of Goods $ Bn 2012
309
2,500
567
1,492
481
1,612
Exports of Services $ Bn 2012
293
1900
208
254
278
613
Imports of Goods $ Bn 2012
500
1,817
659
1,276
646
2,357
Imports of Services $ Bn 2012
489
281
170
285
175
405
Total Trade Goods & Services $ Bn 2012
1591
6498
1604
3307
1580
4987
Source: IMF, IAEA & Space foundation

25. Defence and Technology Budgets
India
China
France
Germany UK
USA
Defence Budget 2011
$ Bn 38
102 48 40 61
716
Nuclear
Power generation capacity 2013 MW
4,391
17,834
63,130
12,068
9,246
101,465
Space Program Budgets 2009 $ Bn
1.06
1.79
0.77
0.1
64.42
Source: IMF, IAEA, Space foundation

26. Electricity Generated
India’s Key Output Indicators
Year
Foodgrain production
(Million Tonnes)
Finished Steel
Production
Cement production
Coal production
Electricity Generated
(Billion KWH)
50.8 1
2.7
32.3
6.6
108.4
4.6
14.3
76.3
61.2
176.4
13.5
48.8
225.5
289.4
241.6
68.6
209.7
570.9
965.7
Estimates
257.4
73.4
223.5
583.1
1051.4
Source : RBI & Economic Survey 2012, Govt. of India

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.
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 2013

29. India Opportunities Healthcare
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

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%
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%
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 2015
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
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%
Source: India Brand Equity Foundation

35. India Inflation Chronic food inflation
Risks ahead
Issues
Indications
Inflation
Chronic food inflation
Infrastructure bottlenecks increase cost of production

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

37. India Issues Indications Balance of Payments Crude oil imports
Risks ahead
Issues
Indications
Balance of Payments
Crude oil imports
Gold imports

38. India Issues Indications Regional Inequalities
Risks ahead
Issues
Indications
Regional Inequalities
Low Human development indices in highly population states
Poor infrastructure in natural resources rich states

39. India Issues Indications Imparting of Skills to youth
Risks ahead
Issues
Indications
Imparting of Skills to youth
Young population has high aspirations
Challenge to upskill 500 million youth
Social consequences of unmet aspirations

40. India Issues Indications Project Implementation
Risks ahead
Issues
Indications
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

41. India Risks ahead Issues Indications Corruption Public uprisings
Paralysis in decision making

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

43. Thank You