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Building an $85-trillion Indian economy

Discussion in 'World Economy' started by Nirmzz, Nov 12, 2011.

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  1. Nirmzz

    Nirmzz 2nd Lieutant FULL MEMBER

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    The writer Minhaz Merchant is the Chairman, Merchant Media Ltd

    According to a study by US banking group Citi, India will be the world's largest economy within 39 years. Indian GDP in 2050, measured by purchasing power parity (PPP), will be $85.97 trillion. China, in second place, will have a GDP of $ 80.02 trillion and the US $ 39.07 trillion (see chart).

    With an estimated population in 2050 of 1.63 billion, India will thus have a per capita income of over $53,000 - in the range of today's wealthiest countries like Switzerland and Norway. Sounds too good to be true? Of course it is.

    On paper - mathematically - Indian poverty should disappear by 2050. The reason it won't is that huge inequalities in income will persist unless we rapidly implement second-generation economic reforms which deliver real benefits to the bottom of India's socio-economic pyramid.

    The first chart in our three-chart collage shows the ranking of the top five countries by GDP in 2050 as per Citi's projections. Indian GDP in 2011 is estimated at $4.45 trillion (PPP). To reach $85.97 trillion in 2050, the Indian economy will have to grow at an average annual rate of 8.1% a year for the next 39 years. Optimistic? Perhaps, but not overly so.

    The Citi study relies heavily on India's two dividends - demographic and democratic. The demographic dividend will ensure that India has the largest number of working-age people in the world (over 800 million) between 2015 and 2035 before tapering off as our population reaches a plateau of just over 1.60 billion and starts ageing (as China's already is). Fertility rates of increasingly educated urban and rural Indian women will dip from today's 2.6 to 1.7, which is when a country's birth and death rates equalise.

    A large number of working-age Indians between 18 and 60, however, will be less than optimally productive if they remain poorly educated and are therefore unemployable. To gain from our 20-year demographic sweet spot, education reform must clearly top the government's agenda. Infosys mentor N R Narayana Murthy was partly right when he said that the standard of IIT students has fallen. It has. Too many are rote-learners, spewed out by coaching classes, not creative thinkers.

    Education reform must start with government-run primary schools. Shockingly, in some villages, primary schools have no teachers, no students and an empty shed that serves as a classroom. The government spends 52,000 crore on education every year. That is less than it spends on fertiliser subsidy alone ( 55,000 crore).

    The second dividend Citi banks on to project India's rise to the top of the GDP rankings in 2050 - especially in comparison with China - is democracy. China's autocratic government, the argument goes, can command 10% GDP growth, build superhighways and create gleaming infrastructure.

    But beneath the towers and the maglev bullet train tracks of Shanghai lurks social tension. As China's per capita income rises, its 1.34 billion people will increasingly yearn for real freedom: a free press, an open Internet and, most crucially, democracy.

    If the Chinese government can't deliver on these, a "Chinese Spring" a decade hence cannot be ruled out. That could plunge China into years of uncertainty. Throughout history, as countries grew richer, they grew freer. Will China prove an exception? Unlikely. By that token, India's democracy is a double-edge scimitar. Our raucous, open society takes us two steps forward economically and then one step backwards.

    [​IMG]

    Building an $85-trillion Indian economy - The Economic Times
     
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  2. Nick 779

    Nick 779 Captain SENIOR MEMBER

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    Too good to be true. But i am optimistic.
     
  3. DragonKnight

    DragonKnight Lieutenant SENIOR MEMBER

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    As long as those "babus" have control over this nation, it will atleast take a century to be the largest economy on earth, gulping down wealth meant for our welfare and those of the needy.... Unless Modi realises this and volunteers for PM post :help:
     
  4. ManuSankar

    ManuSankar Major SENIOR MEMBER

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    Really nice prediction.I will also like to know what will be our average life expectancy by then.You see,I will be an old man by then,hehe!!!!:lol:
     
  5. Manmohan Yadav

    Manmohan Yadav Brigadier STAR MEMBER

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    Thats a bit too much for me to accept,
    they are almost assuming that natural resources are Unlimited in the world with that kind of Figures.
     
  6. ManuSankar

    ManuSankar Major SENIOR MEMBER

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    By that time man kind will new resources,at least i hope so.In one or two decades man will be landing on Mars and Moon.Petroleum and natural gas will be available for at least another 50 years or so.New and unconventional energy sources will be developed.I certainly believe there are plenty of resources yet to be explored in the universe.
     
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