Indra’s Drishtikona (Viewpoint)

Emerging Economy, Rising India

Posted : August 16, 2005 at 10:24 am [IST]

Indian economy is doing fine and emerging stronger every day. It can do better, but that can’t happen unless the attitudes and mindsets of politicians and bureaucrats in India change drastically, and the leftists leave their taboos. Here are some data from the latest ‘India Today’. You can have your own conclusions

“During 1990-2003, only 9 countries- of the 152 on which the World bank gives detailed data- grew faster than India: during 1980-90, 11 did. But there were only two countries- China and Singapore, which grew faster than India during those two periods. India is behind only four countries: China, the US, South Korea, and Japan in terms of foreign exchange reserves today.”
-Kaushik Basu, Professor of Economics and Director of program on Comprehensive economic development, Cornell University, US.

Foreign Investment
Foreign investors have pumped in a net $24 billion in the Indian stock markets since 2003 in the 9 years between 1993 (when the investments were first permitted in India) and 2002, shares worth $15.2 were bought. In past two and a half years, as many as 250 new foreign investors (some like the world’s largest pension fund manager, Calpers) have registered with the market regulator SEBI. Another 611 new investors got permission to trade on Indian stock exchanges in 2003-4. Sensex had a 125% growth and BSE200 index had increase of 148% since 2003. “The Sensex gained even during the Mumbai floods in July 2005.” $7.27 billion is the FII inflow till August 9, 2005. As many as 734 FIIs registered with SEBI.$750 million is the foreign private equity in 65 firms till July this year. During 2004, it was $1.1 billion. $926 million is the FDI in India till April 2005 (Posco commitment of $ 12 billion for a steel plant in Orissa). For 2004, the figure was $3.7 billion. According to the latest AT Kearney FDI Index, India moved ahead of US to become the second most favored destination for manufacturing project after China, and its overall ranking has jumped from sixth to third. The 20% return on equity from Indian companies is the highest in Asia, as per Andrew Holland, Executive V.P. DSP Merril Lynch

Indian companies
Indian firms raised 3.3 billion via overseas issues in 2004-5, up from $995 million in 2003-4. There are 15 Indian firms in the Forbes 200 roster of the best emerging companies. China has just six. 15 assets in 13 countries in 4 continents were acquired by ONGC for $4,300 million. In 2004, India Inc acquired 60 foreign companies; and $ 1.7 billion is the value of these international acquisitions. $22.9 billion is the net profit notched by corporate India in 2004-5.

India and Outsourcing
India controls 44% of the global offshore outsourcing market for software and back-office services, with revenues if $17.2billion in 2004-5. By 2008, India’s market share in global outsourcing will grow to 51%. As many as 400 of the Fortune 500 companies now have either set up offices in India or outsource to Indian technology firms. 660 MNCs bring business of more than $1 million annually to India. It provides employment for over 3.5 million Indians- 1.05 million programmers and other skilled workers, and 2.5 million people in support services such as transport and catering. An estimated 2 million jobs will be provided by outsourcing centers in India by 2011. By the end of 2005, India’s software and back-office exports are expected to reach $22.5 billion and hit the $50 billion in the next 5 years with the industry growing to over $75 billion. 58 cents are the cost saved of every dollar US firms spent on off-shoring. R&D outsourcing will cross $8 billion in India by 2010.
21.7 % is the expected annual growth in the IT sector, which will be the fastest in the Asia-Pacific region this year. $4.9 billion is the estimated worth of India’s info-tech market.
Last year, the Indian units of Cisco systems, Intel, IBM, Texas Instruments and GE filed 1,000 patent applications with the US patent and Trademark Office. About 100 MNCs have already set up research outposts in India. 196 US patents were granted to the CSIR in 2003-4, up from just 6 in 1990-91. 30% of R&D in India is done outside the government, compared to 60% for OECD nations. India spends just 0.8% of its GDP on R&D, compared to China’s 1.32% and South Korea’s 2.96%.

India earned Rs 300 crore by exporting its launch and satellite building expertise last year. 20 satellite launch missions have been undertaken by ISRO since 1980. India is a member of 7 countries exclusive international space club. 300 industrial units carry out almost 70% of ISRO’s fabrication and manufacturing work.

Telephone: 100 million telephone connections are in India today, f which 577.3 million are mobile users. 2 million mobile subscribers are added every month. 900% is the increase in the tele-density since 1993, even after accounting for the rise in India’s population. Rs. 6,000 is the cost in added infrastructure for a new mobile user compared to Rs 24,000 for a landline. By 2007, India will have 250 million phone connections.

Employment:32 million youth are employed in services sector including ITE and BPO workers. Services sector employees are likely to spend Rs.1,000,000 million in a year.6.4% is the annual growth rate of services sector. The hotels and transport sector grew by 10% last year.

Prosperity: 25 crorepati (10 million worth) are created in India everyday on an average, according to Merril Lynch. 9,000 new crorepatis were created in 2004. At 14.5%, this was the second highest growth after Australia, and exceeded the 12% growth in China. 300 Indian Americans have a personal worth of more than $5 million each. 2 million Indians earned over Rs 1 million a year in 1995-96. By 2010, about 17 million will be earning that much.

  93 shopping malls are planned to be built across 14 top cities in the next 2 years. 10.000 luxury cars are sold annually in India. India has 43 million credit card subscribers base in 2004.

  There are already 15.6 million middle-class homes in rural India. The FMCG market for rural India will grow to Rs 10,00,000 million in 2010, from Rs. 4,80,000 million today. Rs 6,378 are the annual per capita consumption expenditure in rural India, up from Rs. 5,834 two years ago. 50% of the turnover of many multinational companies is from rural areas. 38% of the demand of two-wheelers is from rural consumers. Rural consumers will consume 60% of all goods by 2010.

  50 million people are likely to travel abroad by 2020 if the industry grows at 9% a year. Rs. 10,10,000 million are likely to be spent by Indians on travel, inland and foreign, this year. 65,000 Indians honeymoon abroad annually, the largest in the world.

And in other activities: Vikram Seth got Rs 98 million as the advance for “Two Lives”, his forthcoming work of non-fiction.18 million practitioners of yoga generate as much as Rs 1,11,18,800 million in revenue annually. 17, 600 million tickets were sold for Bollywood films in India in 2004. 30 record labels India peddle music online as Bhangra beats ply in London, New York and Moscow.

India must do better in alleviating the poverty, in improving the quality of education, in encouraging innovative culture and entrepreneurship, and in raising the individual productivity and accountability through some robust system design.

- Indra

Category: Industry/Management |