“India is a developed country as far as intellectual capital is concerned”
Jack Welch, former chief of General Electric, the world’s second largest company, made this remark at the beginning of the new millennium when he was still at the helm of General Electric.
‘India will emerge as the third largest economy in two decades and the world’s second largest economy by 2050, behind China but exceeding the US’
As per projections made by the world’s top investment bank Goldman Sachs in their 2001 research paper entitled “Dreaming with BRICs: the Path to 2050.”
Now, as India enters its 62nd year of independence, the country is well on the path to leveraging its vast intellectual capital and transforming itself into a global knowledge economy powerhouse - having already clocked $1 trillion in gross domestic product (GDP) during 2006-07.
India has overshot all expectations to clock several consecutive years of high-speed growth. It has been one of the stars of global economics in recent years, growing 9.2% in 2007 and 9.6% in 2006. Growth has been supported by markets reforms, huge inflows of FDI, rising foreign exchange reserves, both an IT and real estate boom, and a flourishing capital market. There are other facets of India as well that speak volumes about its resurgence as a growing and emerging economy between 1990 and now.
· GDP grew from Rs.5,150 billion to Rs.42,830 billion ($1.7 trillion)
· Per capita income almost doubled from US$ 390 to US$ 740. It is further expected to increase to US$ 2000 by 2016-17 and US$ 4000 by 2025
· Foreign exchange reserves jumped from barely US$1 billion to US$ 310 billion
· Inflows from foreign funds rose from US$ 1 million to over US$ 60 billion
· Foreign direct investment shot up from US$ 97 million to US$ 25 billion
· Indian companies, such as Tata’s, ADAG, RIL, Birla’s, Suzlon, Wipro, TCS, Infosys, Bharat Forge, Sterlite (Vedanta), ONGC Videsh, Ranbaxy, etc., have rapidly enhanced their global footprint with some very high profile acquisitions including Corus & JLR by Tata Group last year itself
o The country’s outward foreign direct investments rose by 29.6 per cent to $17.4 billion in 2007-08
· Exports jumped from US$ 18.1 billion to US$ 155 billion
· India has also overtaken the United States, with as many as 286 million subscribers, and ranks just below China, in terms of telephone subscriptions. India expects to easily achieve the target of 500 million by 2010
· With 33.7 percent average annual growth in knowledge-intensive software and services industry over the last few years, its revenues have gone from a mere US$ 12.4 billion in 2002-03 to US$ 52 billion in 2007-08
· Food grain output rose from 176 million tonnes to a record 230 million tonnes
Furthermore, India has also scored very well on other key socio-economic fronts. It has successfully
- Maintained electoral democracy
- Banished the spectre of famines
- Reduced absolute poverty by more than half
- Dramatically improved literacy
- Vastly improved health conditions
- Emerged as a global player in information technology, business process outsourcing, telecommunications, and pharmaceuticals
- Now emerged as the world’s fourth largest economy in purchasing power parity terms
On the back of 9.6 per cent growth April-December 2006-07, GDP grew by 8.9 per cent during April-December 2007-08 indicating that the growth process however continues apace, in spite of the rapidly changing domestic and international economic landscape triggered by an anticipated slowdown in the American economy and spiraling oil-prices, far out-stripping many of India’s Western counterparts on multiple fronts.
- Food grain output grew by 4.6 per cent in 2007-08, nearly four times the average annual growth of 1.2 per cent between 1990 and 2007
- Overall industrial production grew by 8.3 per cent during 2007-08. Significantly, manufacturing sector grew at the rate of 8.7 per cent
- Services grew by 10.4 per cent in April-December 2007, on the back of 11.4 per cent during the corresponding period in 2006-07
- Manufacturing grew by 8.7 per cent during April-February 2007-08, on the back of 12.5 per cent growth during 2006-07
- Core infrastructure sector continued its growth rate recording 5.6 per cent growth in 2007-08
- While exports grew by 23.02 per cent during 2007-08, imports increased by 27.01 per cent in the same period
- Money Supply (M3) has grown by a robust 20.7 per cent growth (year-on-year) as of end-March 2008, compared to 21.5 per cent last year
- Fiscal and revenue deficit decreased by 13.5 per cent and 33.3 per cent, respectively, during April-February 2007-08 over corresponding period last year
Another significant aspect has been the broad-based nature of the growth process. While new economy industries like Information Technology and biotechnology have been growing around 30 per cent, significantly old economy sectors like steel have also been major contributors in the Indian growth process. For example, India has moved up two places to become the fifth largest steel producer in the world. And with its manufacturing and service sectors on a searing growth path, Lehman Brothers Asia estimates India to grow by as much as 10 per cent every year in the next decade. Expected Trade deals with the Gulf Co-operation Council (a grouping of six Middle Eastern states), the Association of South-East Asian Nations (ASEAN) and the EU, will only help further strengthen this possibility.
Thus, one can safely state that where till the beginning of this decade India was considered nothing more than an ageing White Elephant, in the global economic context, it has successfully emerged as a metamorphical equivalent of a Crouching Elephant. But, for India to further transform itself into a nimble footed highly agile and fast Dancing Elephant, and as has been rightly pointed out by Cheryl Grey in her article titled ‘Brazil, Russia, India and China: Forces to Be Reckoned With’, the biggest challenge that India faces is on the basic infrastructure problems, such as poor roads and unreliable power supplies.
However, the outlook for infrastructure investment in India is very positive. Population growth, urbanisation and the demands of an increasingly consumer-driven society have placed pressure on existing infrastructure in a range of sectors, including electricity generation, telecommunications, airports, water and sanitation. Though India already boasts of the largest and most profitable railway network in the world, one of the largest road networks in the world, has a power generation capacity of 144,564.97 MW and is the second fastest growing mobile phone network in the world, a lot more would be required to maintain targeted growth. For example, as per the government’s own power mission India would require its installed generation capacity to touch 200,000 MW by 2012, as power requirement is expected to double by 2020 to 400,000MW.
The Indian Federal & State governments have actively initiated privatisation of infrastructure assets or have sought private sector financing of new infrastructure projects with the goal of reducing debt, allowing market forces to determine the most efficient means of infrastructure financing, improving efficiency and providing more visible benefits to communities. They have actively initiated and overseen the process of creation of highly attractive Infrastructure asset classed and opportunities right from the early Export Processing Zones (EPZ) and Industrial Clusters which later evolved into Integrated Townships, STPIs, SEZ’s etc. On the policy front the government has also incentivized the private sector significantly with an aim of enhancing their participation in meeting the infrastructure needs of the country, eg. SEZ Policy, Special Township Policy, Tourism Policy, Industrial Policy, SITP, FDI Policy and now the EDZ policy of which the GFH India project will be the first example.
Furthermore, it has been estimated that India will require at least 3-4 per cent equivalent of GDP spending on infrastructure to maintain an 8-10 growth rate, with almost $500 billion of this investment coming from private sector equity investment in infrastructure development over the next five years.
The Infrastructure Investment Opportunity in India has never been better.
Jack Welch, former chief of General Electric, the world’s second largest company, made this remark at the beginning of the new millennium when he was still at the helm of General Electric.
‘India will emerge as the third largest economy in two decades and the world’s second largest economy by 2050, behind China but exceeding the US’
As per projections made by the world’s top investment bank Goldman Sachs in their 2001 research paper entitled “Dreaming with BRICs: the Path to 2050.”
Now, as India enters its 62nd year of independence, the country is well on the path to leveraging its vast intellectual capital and transforming itself into a global knowledge economy powerhouse - having already clocked $1 trillion in gross domestic product (GDP) during 2006-07.
India has overshot all expectations to clock several consecutive years of high-speed growth. It has been one of the stars of global economics in recent years, growing 9.2% in 2007 and 9.6% in 2006. Growth has been supported by markets reforms, huge inflows of FDI, rising foreign exchange reserves, both an IT and real estate boom, and a flourishing capital market. There are other facets of India as well that speak volumes about its resurgence as a growing and emerging economy between 1990 and now.
· GDP grew from Rs.5,150 billion to Rs.42,830 billion ($1.7 trillion)
· Per capita income almost doubled from US$ 390 to US$ 740. It is further expected to increase to US$ 2000 by 2016-17 and US$ 4000 by 2025
· Foreign exchange reserves jumped from barely US$1 billion to US$ 310 billion
· Inflows from foreign funds rose from US$ 1 million to over US$ 60 billion
· Foreign direct investment shot up from US$ 97 million to US$ 25 billion
· Indian companies, such as Tata’s, ADAG, RIL, Birla’s, Suzlon, Wipro, TCS, Infosys, Bharat Forge, Sterlite (Vedanta), ONGC Videsh, Ranbaxy, etc., have rapidly enhanced their global footprint with some very high profile acquisitions including Corus & JLR by Tata Group last year itself
o The country’s outward foreign direct investments rose by 29.6 per cent to $17.4 billion in 2007-08
· Exports jumped from US$ 18.1 billion to US$ 155 billion
· India has also overtaken the United States, with as many as 286 million subscribers, and ranks just below China, in terms of telephone subscriptions. India expects to easily achieve the target of 500 million by 2010
· With 33.7 percent average annual growth in knowledge-intensive software and services industry over the last few years, its revenues have gone from a mere US$ 12.4 billion in 2002-03 to US$ 52 billion in 2007-08
· Food grain output rose from 176 million tonnes to a record 230 million tonnes
Furthermore, India has also scored very well on other key socio-economic fronts. It has successfully
- Maintained electoral democracy
- Banished the spectre of famines
- Reduced absolute poverty by more than half
- Dramatically improved literacy
- Vastly improved health conditions
- Emerged as a global player in information technology, business process outsourcing, telecommunications, and pharmaceuticals
- Now emerged as the world’s fourth largest economy in purchasing power parity terms
On the back of 9.6 per cent growth April-December 2006-07, GDP grew by 8.9 per cent during April-December 2007-08 indicating that the growth process however continues apace, in spite of the rapidly changing domestic and international economic landscape triggered by an anticipated slowdown in the American economy and spiraling oil-prices, far out-stripping many of India’s Western counterparts on multiple fronts.
- Food grain output grew by 4.6 per cent in 2007-08, nearly four times the average annual growth of 1.2 per cent between 1990 and 2007
- Overall industrial production grew by 8.3 per cent during 2007-08. Significantly, manufacturing sector grew at the rate of 8.7 per cent
- Services grew by 10.4 per cent in April-December 2007, on the back of 11.4 per cent during the corresponding period in 2006-07
- Manufacturing grew by 8.7 per cent during April-February 2007-08, on the back of 12.5 per cent growth during 2006-07
- Core infrastructure sector continued its growth rate recording 5.6 per cent growth in 2007-08
- While exports grew by 23.02 per cent during 2007-08, imports increased by 27.01 per cent in the same period
- Money Supply (M3) has grown by a robust 20.7 per cent growth (year-on-year) as of end-March 2008, compared to 21.5 per cent last year
- Fiscal and revenue deficit decreased by 13.5 per cent and 33.3 per cent, respectively, during April-February 2007-08 over corresponding period last year
Another significant aspect has been the broad-based nature of the growth process. While new economy industries like Information Technology and biotechnology have been growing around 30 per cent, significantly old economy sectors like steel have also been major contributors in the Indian growth process. For example, India has moved up two places to become the fifth largest steel producer in the world. And with its manufacturing and service sectors on a searing growth path, Lehman Brothers Asia estimates India to grow by as much as 10 per cent every year in the next decade. Expected Trade deals with the Gulf Co-operation Council (a grouping of six Middle Eastern states), the Association of South-East Asian Nations (ASEAN) and the EU, will only help further strengthen this possibility.
Thus, one can safely state that where till the beginning of this decade India was considered nothing more than an ageing White Elephant, in the global economic context, it has successfully emerged as a metamorphical equivalent of a Crouching Elephant. But, for India to further transform itself into a nimble footed highly agile and fast Dancing Elephant, and as has been rightly pointed out by Cheryl Grey in her article titled ‘Brazil, Russia, India and China: Forces to Be Reckoned With’, the biggest challenge that India faces is on the basic infrastructure problems, such as poor roads and unreliable power supplies.
However, the outlook for infrastructure investment in India is very positive. Population growth, urbanisation and the demands of an increasingly consumer-driven society have placed pressure on existing infrastructure in a range of sectors, including electricity generation, telecommunications, airports, water and sanitation. Though India already boasts of the largest and most profitable railway network in the world, one of the largest road networks in the world, has a power generation capacity of 144,564.97 MW and is the second fastest growing mobile phone network in the world, a lot more would be required to maintain targeted growth. For example, as per the government’s own power mission India would require its installed generation capacity to touch 200,000 MW by 2012, as power requirement is expected to double by 2020 to 400,000MW.
The Indian Federal & State governments have actively initiated privatisation of infrastructure assets or have sought private sector financing of new infrastructure projects with the goal of reducing debt, allowing market forces to determine the most efficient means of infrastructure financing, improving efficiency and providing more visible benefits to communities. They have actively initiated and overseen the process of creation of highly attractive Infrastructure asset classed and opportunities right from the early Export Processing Zones (EPZ) and Industrial Clusters which later evolved into Integrated Townships, STPIs, SEZ’s etc. On the policy front the government has also incentivized the private sector significantly with an aim of enhancing their participation in meeting the infrastructure needs of the country, eg. SEZ Policy, Special Township Policy, Tourism Policy, Industrial Policy, SITP, FDI Policy and now the EDZ policy of which the GFH India project will be the first example.
Furthermore, it has been estimated that India will require at least 3-4 per cent equivalent of GDP spending on infrastructure to maintain an 8-10 growth rate, with almost $500 billion of this investment coming from private sector equity investment in infrastructure development over the next five years.
The Infrastructure Investment Opportunity in India has never been better.
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