'India to gallop at 9% for 20 yrs'

[Godless-Kafir]

I totally agree with you, these doom sayers did the same with Japan through out the 60s,70s,80s and even the 90s. In the end all their wishful ill will eventually failed and Japan grew into an developed nation. I find it funny at one time people accused Toyota,Honda etc., of makeing plastic cars with flimsy steel and poor build. Today the west copies Japan in Car production and the huge gas guzzling models, metal monsters of US have all looked towards Japan for stream lining their production and cutting the use of metal. The irony of it all is that even with an on going success story we can always expect some people to wish for the worst.

 

[Armand2REP]

Although this thread is about India's economic growth, it has typically been taken over by people trying very hard to argue that China is worse off than Sudan. It is simply a ridiculous position to maintain that China has not done wonderfully well from an economic perspective.

It is simply a ridiculous position to suggest it is being compared to Sudan. It is quite right to compare it to the fall of Japan.

It is way too simplistic to argue that China is over-dependent on Japan for its exports. Yes it may be one of its largest export markets, but US-China and US-EU trade is also very substantial indeed. Besides, a lot of what China exports is not exactly "luxury items" and as such for a sizeable proportion of its exports the demand will not suffer significantly. Western companies still think of China as the automatic destination to set up their manufacturing base should they think of moving their base offshore.

Japan is only a small factor, one of which I gave half a dozen inputs as to why comparative advantage will go to other countries.

It is also not correct that domestic consumption in China is not significant. Yes, China would probably like this figure to be higher but if you look at the pace at which Western manufacturers and retailers are falling over one another to enter the Chinese market, it would be simply pig-headed to maintain that its domestic demand is not strong. Just look at the car manufacturers, for example.

Not only is it insignificant, it is on the decline as a share of GDP. Disposable incomes remain flat despite the increase in wages. Just look at the car manufacturers for example, there is gross overcapacity and sales are declining now that the massive subsidies have largely been removed.

China's biggest achievment has been to uplift hundreds of millions of its people out of destitution and misery. Today the incidents of chronic poverty, malnutrition, hunger and basic human suffering are thankfully much rarer than, say in 1990. Of course there is more growth to come. China is not even a middle income country (e.g. Brazil) yet, so there is plenty of potential left.

No one is saying it didn't. What is being said is that the Chinese growth model is over.

The one long term factor in favour of India vis-a-vis China is demographics. In the next 15-20 years China's labour force will age dramatically and this could pose some complications with regards to pensions, healthcare, skills in the economy, etc. India still has a very young population and this is likely to stand it in good stead in the long run.

Which is why India will eventually overshoot a stagnating China.

But credit where credit is due please.

China did real well until the global meltdown, now the weakness of their system has become apparent by anyone willing to look up their skirt.

 

[aramsogo]

^^^
I think you are assuming a static model. China will adapt to the demographic challenges. It is already allowing well educated and wealthy people to have more than one children (those that can afford to pay the penalties or live in Shanghai). It will also import guess workers as it grows wealthier, etc. In my opinion the Chinese mandarins have been very strategic and forward thinking. There is essentially Chinese neo-colonialism in South America, Central Asia and Africa right now. They have a good 30 track record of growth. It won't just hit a wall as much as I know you would like it to.

 

[p2prada]

can you please put up a source for 500b usd being achieved (about to be, that is, in the 12th 5yr plan) since iirc the planning commission not so long back (some 6months back) had curtailed the figure down to 300-350b usd, which is what they thought was feasible thanks mainly to the telecom sector, with road sector taking a heavy beating because of which PM was rather miffed with kamal nath for all his tall claims and a rather tardy show, same with power sector.

I have been out of touch with the economy recently. I don't have hard figures, perhaps can find something in the Ministry of Finance website. But if the last figure was 300-350 then it will be hard to achieve 500 by year end. Disappointing.

With Japan in crisis, you will see Chinese exports in crisis since they are the single largest destination for them. China touts the ability to expand private consumption, but Chinese disposable incomes have taken a nose dive...

China Annual Disposable Income per Capita and Trends[/url]

What are you talking about? That growth trajectory is amazing. From 2000 to 18000 in 20 years shows a 900% growth over two decades. That's impressive.

Like I said. You are exaggerating the demise of China a little too early. What you are saying will come to pass, but only after at least a decade or 2. Investors are still bullish in China.

Their inflation isn't double digits. If the govt can control it by funneling in money then that is calculated in the GDP anyway.

With Japan in crisis, there is going to be delay in planned 90$ Billion USD investment for Mumbai-Delhi corridor.

There could be slight delays. But if a country is in a crisis, the money leaves the country.

 

[nrj]

4,500 Crores provided by Japan Industrial Bank for Phase-I are almost in Indian hands. Remaining 11,500 Crores yet to be secured from Japanese Government for Phase-II. I worry about Phase-II.

World Bank will be soon providing 2.4Billion USDs.

 

[Armand2REP]

What are you talking about? That growth trajectory is amazing. From 2000 to 18000 in 20 years shows a 900% growth over two decades. That's impressive.

That is annual earnings in RMB... it is not that impressive when you translate it to monthly dollars, divide by 12, divide again by 6.5 and see how little they make. Since the global financial crisis, their disposable income has plummeted which is what really matters. Living in China is not as cheap as everyone thinks it is, especially in the cities where they are forcing everyone to move. The poverty rate in urban settings is actually increasing as urban inflation is out of control.

Like I said. You are exaggerating the demise of China a little too early. What you are saying will come to pass, but only after at least a decade or 2. Investors are still bullish in China.

There are 14 new hedge funds created to short China in the last 6 weeks. It is a growing market of bears with Fitch already calling it at 60% chance in the next 3 years and a downgrade of China's credit rating.

Their inflation isn't double digits. If the govt can control it by funneling in money then that is calculated in the GDP anyway.

It is double digits, I have kept a CPI track based on EU weights and it is 10.8% minus education costs which I have not had data sets for. You forget I am living it.

 

[aramsogo]

^^^
14 new idiot hedge fund means absolutely nothing. Anybody and their mother can setup a hedge fund. I know, I've worked for one of the biggest in Mayfair. You can't break China. China has more than double the reserves of the entire hedge fund industry combined.

 

[nimo_cn]

To be honest, I think India can grow faster than 9% if India utilizes its demographic dividend well in the next two decades. But it is gonna be tough, a large and young population is a double-bladed sword, it will spur the development of economy, it will also cause a lot of burdens to Indian society. It won't be easy to maitain a balance between the two.

 

[p2prada]

That is annual earnings in RMB... it is not that impressive when you translate it to monthly dollars, divide by 12, divide again by 6.5 and see how little they make. Since the global financial crisis, their disposable income has plummeted which is what really matters. Living in China is not as cheap as everyone thinks it is, especially in the cities where they are forcing everyone to move. The poverty rate in urban settings is actually increasing as urban inflation is out of control.

The inflation in China is smaller than in India on an average. You can't compare our disposable incomes to Dollars, since the difference is too much. PPP is the best gauge for that. If you are still in China, don't go to Mc Donalds or a five star hotel to check food prices in the country. Go to a poor urban part in the state you are in and see what they can eat commercially, hawkers. That will give you the best clue. Those are the actual govt prices people get food at.

There are 14 new hedge funds created to short China in the last 6 weeks. It is a growing market of bears with Fitch already calling it at 60% chance in the next 3 years and a downgrade of China's credit rating.

More likely a backdrop of the Chinese announcement for cutting back on expenditure.

It is double digits, I have kept a CPI track based on EU weights and it is 10.8% minus education costs which I have not had data sets for. You forget I am living it.

Are you certain this isn't because of the drought situation in and around China's largest river system?

 

[LETHALFORCE]

India is starting out from a low base of 2 % growth for a few decades, China has had 10% growth for many years now so it is much harder to sustain it. Also chinese growth is directly controlled by USA eg if USA were to eliminate most favored trade partner status to China it would probably revert to 0% or negative growth.

 

[thakur_ritesh]

To be honest, I think India can grow faster than 9% if India utilizes its demographic dividend well in the next two decades. But it is gonna be tough, a large and young population is a double-bladed sword, it will spur the development of economy, it will also cause a lot of burdens to Indian society. It won't be easy to maitain a balance between the two.

i think india's main concerns would be

1. the neighborhood we live in, certainly not the best place, though we might off-set this by engaging with international community more, and i quite like the points being put forward by ejazr on this front which should define how our foreign needs to be in times to come, points he made in other threads (threads: india joining nato and another one).

2. fiscal management, and fend off the factors which might disrupt this growth, a pretty difficult task, 20years 9% growth rate, well it better be put as a dream run, if such a thing were to happen. at the moment, even at this very moment its a difficult task, but over an extended period of time if they can manage over 7% real growth, 4% inflation rate (that inflation rate is highly questionable though), and proper fiscal management, i would for one be more than happy.

3. internal disputes be better managed, and people be brought on board the main stream and made a part of this growth or we are pretty much sitting on a volcano waiting to erupt.

if we can maneuver our way through these three points i would like to believe we will be more or less sorted out, if not, then as armand wrote, india would join the list of japan, germany, ..................

 

[p2prada]

4,500 Crores provided by Japan Industrial Bank for Phase-I are almost in Indian hands. Remaining 11,500 Crores yet to be secured from Japanese Government for Phase-II. I worry about Phase-II.

World Bank will be soon providing 2.4Billion USDs.

The investment promised for the corridor is massive and over a long stretch of time. If the Bhuj earthquake did not stop the Gujaratis from their brilliant performance in the past few years, the Tohoku will not stop the Japanese either same as the 2004 Tsunami did not stop Tamil Nadu from posting consecutive double digit growth.

 

[p2prada]

i think india's main concerns would be

1. the neighborhood we live in, certainly not the best place, though we might off-set this by engaging with international community more, and i quite like the points being put forward by ejazr on this front which should define how our foreign needs to be in times to come, points he made in other threads (threads: india joining nato and another one).

2. fiscal management, and fend off the factors which might disrupt this growth, a pretty difficult task, 20years 9% growth rate, well it better be put as a dream run, if such a thing were to happen. at the moment, even at this very moment its a difficult task, but over an extended period of time if they can manage over 7% real growth, 4% inflation rate (that inflation rate is highly questionable though), and proper fiscal management, i would for one be more than happy.

3. internal disputes be better managed, and people be brought on board the main stream and made a part of this growth or we are pretty much sitting on a volcano waiting to erupt.

if we can maneuver our way through these three points i would like to believe we will be more or less sorted out, if not, then as armand wrote, india would join the list of japan, germany, ..................

We have plenty of states which are yet to do a Gujarat, Karnataka, Andhra Pradesh and Tamil Nadu. Once that happens, fiscal deficit will be of lesser concern.

4% inflation is not possible if all or more than 75% of our states are nor productive.

Out of all the problems you posted, the internal disputes will be the biggest headaches. We are already seeing the circus in Karnataka. These kind of situations aren't investor friendly. Lucky for Karnataka, Brand Bangalore is still riding strong.

 

[Armand2REP]

The inflation in China is smaller than in India on an average.

I have a number of data sets from a variety of sources for the complete CPI range except education costs. I know how to do it, analysing price trends is part of my job. The base price from when I started is what matters, not if it is in an expensive base price, we are measuring the change in price over time. Inflation is twice what CCP is reporting.

You can't compare our disposable incomes to Dollars, since the difference is too much. PPP is the best gauge for that. If you are still in China, don't go to Mc Donalds or a five star hotel to check food prices in the country. Go to a poor urban part in the state you are in and see what they can eat commercially, hawkers. That will give you the best clue. Those are the actual govt prices people get food at.

I don't do my shopping at McDonalds and 5* hotels. I go to super markets and street vendors for grocery shopping. I go to the Foshan marketplace regularly which is quite a ways from Tian He. My girl knows where the bargains are at. Cost of living is higher than I ever imagined even getting the "Chinese price." The PPP ratio given to China by the IMF is a joke, it is really only 30% cheaper living in Guangzhou than any medium Western city.

More likely a backdrop of the Chinese announcement for cutting back on expenditure.

The net result of cutting investment capital is a decrease in GDP since 93% of growth comes from it... duh.

Are you certain this isn't because of the drought situation in and around China's largest river system?

The drought only effects a couple percent of agricultural output, the cause is the excess money supply floating around China.