Incredible India, Only If Seen Over 5 Years
The last year has been terrible when it comes to economy news. The stock markets have been weak, the rupee weaker and industry has been complaining hard about political apathy, administrative indifference and policy paralysis.
What if we forget for a moment our obsessions with the last 12 months in specific and see how India stacks up over a slightly longer term, like the last 5 years? IndiaSpend’s Sourjya Bhowmick dips into a ‘Fact Book’ titled, “India, The Incredible Investment Destination” released by the Ministry of Finance in June 2012. And he comes away feeling refreshed and even optimistic. Let’s see if you feel the same.
Incidentally, the Fact Book dwells heavily on the financial and capital markets, where things do look more encouraging. For instance, it shows how India has been amongst the best performing markets in its peer group, since liberalisation, particularly against the Brazil, China, South Africa, Indonesia, Korea and Taiwan. Moreover, Indian equities have delivered a Compounded Annual Growth Rate (CAGR) of 14% in the last two decades.
India’s Per Capita Income Rockets
It also points out that India’s Per Capita Income has shown the second fastest growth in the world over the last 5 years; after China. Moreover, in this period, industrial production has gone up, so has foreign portfolio investment.
For instance, India had inflows of $90.8 billion, the highest when ranked against Brazil, Taiwan, South Africa, Indonesia and Korea. Now, let’s use the Fact Book to give you a snapshot of the 5 fastest growing economies in the world in the last 5 years;
GDP Growth Over 5 Years
| Country | Annual Average Growth rate over 2006-2011 |
| China | 10.9 |
| India | 8.4 |
| Peru | 7.2 |
| Argentina | 7.1 |
| Indonesia | 5.9 |
Source: India, The Incredible Investment Destination
Despite the fact that global recession hit India for the last 3 years of this period, India has grown at average rate of 8.4%. Of course what might come as news to you is that the next 3 fastest growing economies were Peru, Argentina and Indonesia. A fact of course not lost to any fund manager tracking emerging or frontier markets.
Now, let’s look at some more happy numbers;
Happy Macro Numbers
| Key Indicators | 2005-2006 | 2011-12 | %change |
| Real GDP* | 32,54,200 | 5,22,200 | 60 |
| Real Per Capita GDP | 33,548 | 46,221 | 38 |
| Investment (as % of GDP) | 35.8 | 37.6 | 5 |
| Exports | 5,15,000 | 15,15,000 | 194 |
| General Govt Gross Debt (as %of GDP) | 77.4 | 64.9 | 16 (-) |
| FDI Inflow | 45,500 | 2,34,000 | 414 |
| FDI Outflow | 30,500 | 1,29,000 | 323 |
| Workers Remittances | 1,40,000 | 3,18,500 | 127 |
| Gross International Reserves | 7,55,000 | 14,70,000 | 94 |
(Rs Crore)
Source: India, The Incredible Investment Destination
As the Table suggests, exports, FDI (inflow + outflow) has increased manifold. The growth in GDP and Per Person GDP is also strong. However, investment as a percentage of GDP has not grown that much. On the other hand, Government Gross Debt has reduced by 16%. Gross debt is expected to come down to 60% by 2015-16, which will be a reduction of 7% from now.
India of course came second behind China on the issue of attracting FDI. But do note that it’s an improvement from its 3rd position in 2010. There are more interesting titbits; all mostly positive. It’s not clear of course whether things will look the same 5 years hence. But then, who waits that long?
