It is well published and we all know that in the past 5000 years of India history, India has never invaded any country. But do you know that out of the that last 5000 years, 4750 years – India’s growth rate (which is measured by increase in GDP or Domestic Product) has been the highest in world. It was only when the British came to India, we saw, India’s GDP going down. NO wonder, India was known as SONE KI CHIDYA.
India called “Sone Hi Chidya” because we contributed almost 30% of World GDP at some time. If you have 15 Minutes must watch this Video.
Year 1000 (in 1st AD it was 32.9% & currently we hold 7% share on PPP basis)
Source: Wikipedia
Once again, we, the Indians are making some big impact in the world’s economy. India is the now fastest growing nation of the world.. & third largest economy PPP basis.
The International Monetary Fund (IMF) downgraded forecasts for GDP growth rate of many countries including China. But it is positive on India. Here are the GDP growth rates of the last few years and forecasts for 2015 and 2016 –
Source: IMF
The important thing to note in this table is that India’s GDP is expected to grow at a higher rate than China. The International Monetary Fund (IMF) also expects good growth rate all the way up to 2020.
Why is India on this path of good growth?
High GDP growth rate is attributed to many factors –
1) New Government – The government has taken some positive steps for smooth business and better governance. There have been steps towards effective administration, cutting red-tape and improving transparency in government offices. This has increased efficiency which helps businesses as dealings with the government departments are smoother. administrative efficiency helps since it comes after several years of policy paralysis. There have been announcements of many policy reforms which help the economy. For example, it takes 27 days to register a business. The new government wants to make India a business friendly destination and has planned steps to be implemented so that businesses can be registered in one day. Import rules for some raw materials have been eased. The budget announced a corpus of Rs. 1000 crore set up for entrepreneurial units and startups. Yes, there are still hiccups for foreign investment and bureaucracy functioning but these things cannot be changed overnight and there is an awareness and intention to change these issues. There is a wave of optimism within the country as well which makes people motivated to do better in their profession, service and business which contributes to the business.
They also react to changes in the global economy and business. For example, looking at the declining oil prices, the government hiked the excise duty on petrol and diesel to augment its revenues and the additional revenue has been allocated for infrastructure development. Considering that the whole world is going digital, the government has started working towards a Digital India where all government records will be digitized.
2) Steps taken by RBI – The Reserve Bank of India (RBI) led by Raghuram Rajan has also taken fresh steps to improve the banking system and economy. The inflation was very high. For example, Consumer Price Index (CPI) in November 2013 was 11.2% and in November 2014, it fell to 4.4%. Of course the dropping of oil prices also had a role to play in this. The rupee was also unstable before the new governor took charge. Now the rupee has performed better than many currencies. Fiscal deficit is also more in control now. The markets also have more confidence in the new central bank governor.
3) Oil Imports – India’s oil import bill is very high and one of the main reasons for export import imbalance. Now with falling oil prices, inflation has been contained, GDP growth has improved and current account balance in in a better shape. This presents a good opportunity for reform and growth as capital saved on the oil bill can be used for investment in infrastructure and public goods.
4) Demographics – India has the advantage of a young population and a widely educated population ready to join the workforce. This means additional GDP can be produced. The dependency ratio in India is good so there are more people working and lesser people dependent on the working population compared to many other countries. If the young population is trained and educated in the right skills, this human capital can be used in the best manner else the huge population can become dependent on limited resources which is not good for the economy.
Look around you and will realize one more factor which is driving India. This is the youth of the nation. YES, the young India. Do you know, India account for over 25% of the total young population of the globe which is less than 35 years of age and it accounts for more than 60% of our population. Young population not only adds to working population but are the main drivers of demand. just ask yourself, DADA ji jyada demand karte hai ya phir pota – poti.
5) India has maximum number of English speaking person, even more than the entire population of US. No wonder India is becoming a outsourcing center for the globe. The entire world is looking at India to support for their service. A credit card verification in Australia takes place in Jaipur. If you dial railway enquiry number from London, it lands up in Gurgoan Call center. Just Amazing.
5. India is growing on Infrastructure and even if half of the projected Infrastructure projects become reality, it will further give boost to India’s growth. New government is actually talking about laying more roads than built in last 50 years.
The list to India’s growth story is endless and it would takes more space than the entire blog till date.
Let’s quickly see extract from famous report of Goldman Sach “Dreaming the BRICs: Path to 2050″ (BRIC = Brazil/Russia/India/China)
India will takeover Japan in 2032 to become 3rd largest economy of the world, just behind US & China.
How to participate in India Growth Story
All I want to convey is that we need to Believe in ourselves. The direct impact of this growth story would reflect in the equity markets and to share this prosperity, you need to partner India companies for long run by way of Equity Investment.Invest in Equity and you will reap the benefits of Indian growth story. In the last 35 years, India’s GDP has grown consistently over 6% and now we are nearing 7.5% GDP growth target. In the last 35 years, stock market have given more then 17% returns p.a. and Rs. 1 Lac invested in sensex is worth more than 2.6 crores as on Today. But the fact that a average Indians have not participated such marathon growth.
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