E HH Is India The Next China?

Is India the Next China?

I rather doubt it…  China is an autocracy / plutocracy that exercises strict control over the most minute activities of its citizens and has kept its economic miracle alive by massive Stalinesque projects like building whole cities with hundreds of empty buildings and thousands of vacant homes and apartments.   For better or worse, in many ways India is the exact opposite!

India is a massive, sprawling, messy, “seemingly” disorganized kaleidoscope of diverse peoples that somehow manages to maintain a democratic political process and a capitalist economic system that has for too long been encumbered by a repressive regulatory regime,  local and higher corruption on too many levels, and an infuriatingly stultifying bureaucracy. 

If that were what the future continued to hold, I would be wary of investing in India beyond the token amount of our allocation to all emerging markets.  But Indian voters last May gave Prime Minister Narendra Modi something of a rarity in India: a complete majority for Bharatiya Janata (the Indian People’s Party.)  While he and his party will have to walk a tightrope between improving social welfare and economic development, his history shows he is clearly dedicated to economic growth and development.  This is the catalyst India has needed. 

The World Bank seems to agree.  Their latest projection is that China’s GDP growth will stay much the same, or even decrease in the immediate future, while India’s GDP increases. By 2017, the World Bank is predicting that India will nudge China aside for the highest large-nation growth rate in the world. 

With some 200 million active Web users, India dwarfs most developed nations in producing Internet-savvy professionals.  With a median age nationwide of just 26, there is much dynamism within India that needs only enlightened economic policies and social, health, and education initiatives to thrive.  For comparison, the median age in the USA is just under 38; in Europe it is 40 (though that includes its 13 million Muslims, whose median age is 32;) in China it is 35; and in Russia it is 38.

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Disclosure: The author is long MINDX and INCO. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The ...

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Prem Gahlout 4 years ago Member's comment

u dont have decency,how u dare t call our great democratic nation "some how managed to maintain democratic political setup,if u don't have knowledge of Indian pasts,go and read MAHABHARATA,where the first seed of democracy was sowed in india.

Koshur 72 4 years ago Member's comment

And on the same democracy principles you are killing people in Kashmir and North East!.

Hosang Vandriwala 4 years ago Member's comment

So far no steps have been taken by the Modi govt on its promise of "Minimum Government and maximum governance". The size of the government bureaucracy still remains the same and is eating up the development budget of the Central and State Governments. The divestment of the public sector industries has not yet kicked off and continues to drag down the economy. The report of the seventh pay commission recommendations will cause dissavings by hike in salaries and are also expected to exert severe pressures on Capital expenditure in the coming years.

Akash Talukdar 4 years ago Member's comment

What exactly do you mean by "diverse peoples that somehow manages to maintain a democratic political process """...........?? Somehow word is absurd, in that case this "somehow" country cannot be 4th Largest economy of the World. Watch out the coinage of word you use. No Offence

Prakash Pasumarthy 4 years ago Member's comment

It is heartening to hear what Joseph said. What i would like to add is that India was largely unaffected during most of the recessionary period. That is because of of high level of local consumption. We have to supplement that now with robust exports. That would be the icing on the cake. Besides the new budget encourages 'Make in India' Which would mean higher assimilation of latest technologies and also higher number of jobs. India has been lost for the first 50 years after independence, then it drifted aimlessly and now we under Prime Mininster Modi's leadership we are firmly on a growth trajectory.

Sivakumar Pillay 4 years ago Member's comment

Any action by Modi will dampen, if the Labour Law,the attitude and the mentality of the Indians doesnt change.Look at it,they are very Rigid and never ever have the policy of give and take or any flexibility.For any investors,environment,atmosphere and the people must be friendly AND if this basic fundamental are not available then how are you going to attarct investore and engineering to increase your GDP.

Preetam Biswas 4 years ago Member's comment

Growth in China has been driven extensively by the Government, which in reality is the largest capitalist entity in the world (irony!) Growth in India over the last decade has happened not with the help but in spite of the Indian government and its fallacies. Describing India's economic story as homogenous could lead to inaccurate conclusion. With a federal structure that allows the states to decide on a very large portion of the Indian economy, big leaps will not be possible till clean, transparent and corruption free government agencies are in place at the state level. The hope is more and more of the general population votes for government performance at all levels and not for populist hand outs.

Shaji Nanu 4 years ago Member's comment

Good piece of information Joseph. Hear me out. India's development was steady over several decades and this establishes the fundamentals are strong. For any country, to succeed in Economic Adventures, a strong political establishment is a must. As long as new Indian Government can remove obstacles by avoiding different layers of Corrupt Offices and simplify the process in doing business with transparent and effective tax regime, it could out-pass China within 2030 in development. People who wanted to invest in India and take a bet on Infrastructure and make steady income where India requires minimum a $1Tr. It's a great opportunity for all Pension Funds around wealthy nations.

Krishna Kalekar 4 years ago Member's comment
India may eventually catch up with China, but there won't be a narrowing of disparity among the rich & the poor, and there likely won't be a change in the level of corruption or bureaucracy.
Joseph Shaefer 4 years ago Author's comment
MY THANKS TO ALL 5 OF THE ABOVE MEMBERS FOR YOUR PERSPECTIVE AND COMMENTS. None of us have a lock on the best thinking on any given subject and the give and take these forums present help all of us hone our thinking just that much better!
Terry Caruso 4 years ago Member's comment

The author did a great job of laying out both the potentials and perils of investing in India.

I've had my eye on India for a while. I for one am very optimistic about the mandate given to Bharatiya Janata. I believe they will finally be able to implement the economic reforms so badly needed in the country. It will be a major boon both for India and its investors.

Venkat A 4 years ago Member's comment
My only question is that why are you differentiating 13 million Muslims out of 750 million Europeans. India needs more improvement.
Joseph Shaefer 4 years ago Author's comment

As I said in the article, because it skews the average age lower than it would be otherwise. Without counting the Muslim population, Europeans are actually older on average.

Preetam Biswas 4 years ago Member's comment

I would think instead of differentiating Muslim population in Europe to drive home your point about the median age, a better yardstick would have been differentiating it based on immigrant population versus native citizens. Just my thought.