pkt sir india superpower

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    WILL INDIA BECOME AN

    ECONOMIC SUPERPOWER

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    A. WILL INDIA BECOME

    AN ECONOMICSUPERPOWER?

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    India currently has the 11th largest GDP

    in the world

    WDI: Constant 1995 US$ billion, 2002

    230

    248

    268282

    347

    411

    414

    452

    477

    515

    637

    650

    716

    1181

    1237

    1410

    1552

    1976

    3979

    10417

    Sweden

    Belgium

    Sw itzerlandTaiw an

    Russia

    Australia

    Netherlands

    Brazil

    South Korea

    India

    Mexico

    Spain

    Canada

    Italy

    China

    France

    United Kingdom

    Germany

    Japan

    United States

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    accounting for 1. % of the global

    GDP in 2002

    1.1%

    1. %

    1. %

    1. %

    1. %

    1. %2.0%

    2.1%

    2. %

    . %

    . %

    . %

    . %

    . %

    12. %

    .0%

    Russia

    Australia

    Netherlands

    Brazil

    Korea, Rep.

    IndiaMexico

    Spain

    Canada

    Italy

    China

    FranceUnited Kingdom

    Germany

    Japan

    United States

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    and ranks 2 th in the world by total trade in

    goods and services (US$ billion, 2002)

    115119

    131133

    151155

    165

    172193202

    204

    209215

    226

    289293

    363374

    377478481

    558

    574

    615706

    815850

    9251356

    2374

    Poland

    aud ab aNorwa

    ra l

    Ind aDen ark

    Tha landu tralia

    wedenRu ian

    ala ia

    Irelandwitzerland

    u triaingapore

    Taipei, Chine ee ico

    Spainorea, Republicof

    Ho ng ong, Chinaelgiu

    Canada

    NetherlandItaly

    ChinaFrance

    United ingdom

    Japanermany

    United State

    WTO: US$ billion, 2002

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    India has been one of the fastest growing

    economies in the world over the last 20 years

    Annual average growth rates of 10 fastest growing economies over

    19 0-2002 excl. small countries (pop < 10 million)

    Source: WDI

    5.3

    5.4

    5.6

    6.0

    6.3

    6.5

    6.6

    6.8

    9.5

    5.2Pakistan

    Cambodia

    Indonesia

    India

    Thailand

    Malaysia

    Vietnam

    Taiwan

    South Korea

    China

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    What does the Goldman Sachs BRIC Report say?

    (BRIC=Brazil, Russia, India, China)

    2.5%

    1.9% 1.8%2.1% 2.2%

    2.9%2.4%

    -0.1%

    9.5%

    5.6%

    0.9%1.3% 1.3%

    1.8%2.0%

    2.6%

    4.2%

    5.6%

    7.7%

    8.5%

    -1%

    1%

    2%

    3%

    4%

    5%

    6%

    7%

    8%

    9%

    10%

    Japan

    Italy

    G

    ermany

    Fr

    ance

    UK

    US

    Brazil

    Russia

    China

    India

    Historical (1980-2002) Goldman Sachs (2000-2050)

    Goldman Sachs in their BRIC report have higher than historical projections for

    Brazil and Russia and lower predictions for China

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    leading India to emerge as the rd largest economy

    in 2050 (1995 US$ billion)

    2185

    3297

    3816

    3919

    5367

    5596

    6092

    30209

    35067

    43926

    Ital

    ran e

    er an

    u ia

    ra il

    apan

    India

    hina

    Goldman Sachs: Constant 1995 US$ billion

    Note the big gap between the first three and the rest

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    Projecting GDP using historical growth rates,

    India would be the th largest economy in

    2050

    339

    2598

    3111

    3960

    4974

    6458

    7307

    8662

    16706

    19233

    37781

    96178

    Ru ia

    razil

    Ital

    United ingdom

    rance

    erman

    India

    ai an

    outh orea

    Japan

    United tate

    hina

    WDI: Constant 1995 US$ billion

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    Under GS assumptions, India would be the

    worlds rd largest trader in 2050

    948

    1013

    1238

    1421

    2021

    2054

    3018

    5575

    6969

    13842

    0 2000 4000 6000 8000 10000 12000 14000 16000

    Italy

    Brazil

    Japan

    France

    Ger any

    K

    ia

    India

    US

    ina

    Goldman Sachs & WDI: Constant 1995 US$ billion, projected at

    historical Trade-to-GDP ratios

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    Using historical growth rates, India would be

    the 10th largest trader in 2050

    0.4%

    0.9%

    2.6%

    2.6%

    4.1%

    4.2%

    6.7%

    7.6%

    14.7%

    15.5%

    21.1%

    59.1%

    Ru ia

    Bra il

    India

    Ital

    nitedKingdo

    ran e

    er an

    apan

    nited tate

    Tai an

    outhKorea

    hina

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    Will India Become an Economic Superpower?

    India is already a large player.

    It will become larger.

    But it may not become one of three giants

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    B. DOES IT MATTER IF

    AND WHEN INDIA

    BECOMES AN ECONOMICSUPERPOWER?

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    India is already a population superpower

    58 59 60 82127 146

    176

    282

    1262

    1002

    50 61 64 74100 118

    228

    420

    1418

    1601

    0

    200

    400

    600

    800

    1000

    1200

    1400

    1600

    Ital

    ran

    e U

    K

    German

    apan

    Ru

    ia

    Bra

    il

    U

    China

    India

    Population(millions

    )

    2000 2050

    Goldman Sachs

    India will be the worlds most populated country

    by 2050; its population is expected to stabilize by

    the year 2100 at 1.8 billion

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    With a PC GDP of $ 9 , India today ranks 12 th in

    the world

    0 10000 20000 30000 40000 50000 60000

    INDIA

    U

    G

    ANY

    ANC

    UK

    I

    A

    Y

    JAPAN

    CHINA

    AZI

    U

    IA

    WDI: Constant 1995 U $, 2002

    The fundamental challenge facingIndia is not

    to become an economic superpower but to

    become rich and eliminate poverty.

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    Alternative Scenarios

    If India grew at GS rates it would be the poorest of the BRIC and G countriesIf India grew at GS rates it would be the poorest of the BRIC and G countries

    in 2050, but equivalent to a lowin 2050, but equivalent to a low--end high income country like Spain todayend high income country like Spain today

    If India grows at historical growth rates ( .5%) for the next 50 years, IndiaIf India grows at historical growth rates ( .5%) for the next 50 years, India

    would have in 2050 a GDP PC of US $ 5 (constant 1995 US$) equivalentwould have in 2050 a GDP PC of US $ 5 (constant 1995 US$) equivalentto a lowerto a lower--middlemiddle--income country like Brazil today.income country like Brazil today.

    If India reverts to the Hindu growth rate ( .5%), its 2050 GDP p.c. will beIf India reverts to the Hindu growth rate ( .5%), its 2050 GDP p.c. will be

    US$ 1 2 , equivalent to Iran today.US$ 1 2 , equivalent to Iran today.

    Summary of scenariosSummary of scenarios

    tr t ri 8% 6.50% 3.50%

    P I ( D) 494 18731 4564 1723

    ki f i 2050 11t 3r 6t t 12

    ki f P i t 128t 23r 44t 77t

    2050

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    C. WHAT MIGHT PREVENT

    INDIA FROM BECOMING

    AN ECONOMICSUPERPOWER?

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    RISKS TO GROWTH

    So far, just doing trend analysis. But economic growth can

    slow down as well as speed up. Countries can catch up, but

    also be left behind.

    Argentina:

    1 9 GDP pc = 91% of US GDP pc

    1999 GDP pc = % of US GDP pc

    What are the factors which might slow down growth in

    India?

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    1. MACRO SHOCKS

    Has the economy been shock-proofed?

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    2. SECTORAL CHALLENGES

    Sectoral growth rates since Independence

    (P rc nt50s 60s 70s 80s 90s

    1 ricultur nd lli d 3.1 2.5 1.8 3.6 2.8

    2 Industr * 6.3 5.5 4.1 7.1 5.7

    3 S rvic s 4.3 4.8 4.4 6.7 7.8

    4 GDP f c r c st) 3.9 3.7 3.2 5.6 5.8

    * Includ s nstructi n

    Source: Central Statistical Organisation

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    2. SECTORAL CHALLENGES: Industry

    35.7

    24.917.3 15.6 15.9

    22.1

    26.6

    29.6

    47..9

    42.248.

    69.

    3.1

    37.433.3

    1.9

    28.6

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    90%

    100%

    LDCs Indi OECD -

    r n

    Afri

    E stAsi &

    a ifi

    C ina

    Agri lture Indus trervi es WDI

    Indias low share of industry in GDPcompared to East Asia.

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    3. GROWING UNEMPLOYMENT:

    jobless growth?

    Elast ty E