India to surpass China, will become world's largest economy by 2050: Report

[Mad Indian]

China hasn't had sustainable growth since the financial crisis in 2008. It will be far sooner than most think.

And we all dream of the demise of the enemies rather than think about the improvement of the self

 

[Mad Indian]

Yes. PPP is very important. But it is also important to look at Nominal GDP. You need to look at both sides of the coin. PPP gives you local consumption - roti kapna aur makan but Nominal GDP buys you overseas armaments and technology - Rafles, C17s etc

At PPP India is 4th in the world, but at Nominal GDP India is something like 8th in the world, somewhere just behind the UK. Therefore on the international buying power stakes India is not as wealthy as PPP would suggest. Although it is fair to say that provided India keeps improving PPP, Nominal GDP will eventually catch up.

The Nominal GDP is growing at a rate of 15-20% pa while the real growth is at the rate of 7%(approx) per year. You still think it will be very significant in the 2050?

 

[LalTopi]

The Nominal GDP is growing at a rate of 15-20% pa while the real growth is at the rate of 7%(approx) per year. You still think it will be very significant in the 2050?

Qualified Economists should be able to explain this better that I, but the way I think it works is that GDP is calculated for each country in its local currency - for India this is in Rupees. This is Nominal GDP in Rupees and this is what is growing at 7%. To compare this with other countries, typically this is done by converting to dollars - i.e Nominal GDP in dollar terms. But a dollar can by you a lot more food and services in India than say in the US or Europe - so Economists come up with an adjusted GDP figure to take into account the relative cost of living for each country - this is called the PPP figure.

Theory says that eventually India's Nominal GDP (in dollar terms) should increase at a faster rate to catch up with PPP GDP, because as India does so well the value of the Rupee should rise against the dollar - so your 15-20% makes sense. Only problem is I thought the Rupee has fallen over the past year???

But in any case even at 7%, India's economy still doubles every 10 years, so I would not turn my nose up at it. With the approriate investment in Industry and Infrastructure this can be improved upon.

 

[LalTopi]

China hasn't had sustainable growth since the financial crisis in 2008. It will be far sooner than most think.[/QUOTE

Interesting. Can you expand further please?

 

[Armand2REP]

Interesting. Can you expand further please?

Since 2008, China has been on a lending binge. The economy has become so inefficient it costs $5 of spending to make $1 of GDP growth. Current state liabilities range anywhere from 135% to 180% of GDP. Local government debt is twice the estimated $1.7 trillion and actually $3.4 trillion, 40-50% of GDP just in that. Railway Ministry owes nearly $400 billion, the highway debt is just as big. Half of the SOEs are losing money and keep taking out loans to bail themselves out. CCP is on the hook for all of it. It is truly a Japanese style stagnation in the making.

 

[LalTopi]

Since 2008, China has been on a lending binge. The economy has become so inefficient it costs $5 of spending to make $1 of GDP growth. Current state liabilities range anywhere from 135% to 180% of GDP. Local government debt is twice the estimated $1.7 trillion and actually $3.4 trillion, 40-50% of GDP just in that. Railway Ministry owes nearly $400 billion, the highway debt is just as big. Half of the SOEs are losing money and keep taking out loans to bail themselves out. CCP is on the hook for all of it. It is truly a Japanese style stagnation in the making.

Debt fuelled growth. And the bubble may burst. Maybe there is hope for Tibet yet.

But is this not the same as QE (quantitative Easing) in the west?

 

[Armand2REP]

Debt fuelled growth. And the bubble may burst. Maybe there is hope for Tibet yet.

But is this not the same as QE (quantitative Easing) in the west?

The same result, not the same process. China has a policy that for every new dollar they print, they must print another to buy FOREX. This is why their FOREX reserves have skyrocketed over the last few years to offset their exhausted printing presses. It is not a fund they can dip into as reductions in reserves raise the value of the RMB. Go to far into that and you kill exporters. They are also leveraged against bank loans that can't be touched. FOREX reserves have been declining the last couple quarters to the dismay of CCP as rich Chinese move their money offshore. As money moves out, they must sell reserves to keep it pegged to the dollar. It is a fine balancing act they have created with few policy tools to react to crisis.

 

[ejazr]

What makes you think that we will be able to sustain that growth? Because we have this fcuked up UPA?

Who knows if UPA or NDA will even exist by then. But UPA has maintaed an average of 8% over the past 8 years and that is DESPITE the GFC shock aka the Great Recession. Somthing which the NDA never had to contend with.

This shows that as long as the basic policies of removin poverty, building infrastructure and minimal govt. interference in free makets is adhered to; we can make sure that the 7-8% GDP gorwth rate is maintained for the next 3 decades.

In any case, apart from the govt., its the fundamentals that give India its positive advantage. We will have a growing workforce which should keep wages down unlike other countries which either already have declining workforces like EU and Japan or will soon have declining workforces like China.

Just trying to eliminate poverty and make sure every Indian can earn more than $2 per day would be enough to push our economy to no.2 status.

Governments don't have to be super-smart to do this, even average performance and minimal interference in free markets will do as long as no major disasters happen.

Just quoting the FM on this issue

There is a consensus among analysts that India has a remarkable stretch of growth over the next thirty years. Several reasons support growth to be sustained at a high rate of 8 to 9% per annum.
First, the savings and investment ratios have gone up in the last few years and are reminiscent of the high growth East Asian economies.
Secondly, India's working age population is young with over half the population is in the twenties.
Thirdly, growing middle class incomes have led to self sustaining buoyancy in domestic demand, particularly in the rural areas.
Fourthly, India is making rapid progress in infrastructure, both social and physical and along with better access to cutting edge technology is likely to see improvement in productivity.
Although these are the primary factors for India's dynamic growth, there are many other drivers of India's growth story including the energy and vibrancy of our entrepreneurs, strong services sectors, emerging knowledge spheres and sunrise sectors and growing number of engineers and scientists.

 

[p2prada]

Who knows if UPA or NDA will even exist by then. But UPA has maintaed an average of 8% over the past 8 years and that is DESPITE the GFC shock aka the Great Recession. Somthing which the NDA never had to contend with.

1997- Asian Financial crisis
1998- Nuclear Sanctions
2001- Bhuj earthquake
2002- Drought
2002- Operation Parakram

They had plenty to go around. Comparatively we breezed through the economic shocks going on now.

 

[ejazr]

1997- Asian Financial crisis
1998- Nuclear Sanctions
2001- Bhuj earthquake
2002- Drought
2002- Operation Parakram

They had plenty to go around. Comparatively we breezed through the economic shocks going on now.

Foreign trade between 1998-2004 was around 25-30% of GDP compared to 55% in 2008. But still we weathered the GFC better than the Asian financial crisis - or more accurately the ASEAN financial crisis if we look at our GDP growth rates for that period and post GFC.

IMO, I think if we compare the worldwide impact all those listed combined; they would pale in comparison with the GFC crisis of 2008. The global growth rate wasa negative for the first time in recent history (~ -2%). We pretty much had global trade at a standstill and the follow on affects to soverign bonds is still ongoing with severe contractions in EU. Simulataneous slowdowns in the US, EU and Japan is something we have seen for the first time since liberisation in the 90s in India.

Ofcourse, I wouldn't give all credit to UPA. The best thing they did was provide a stimulus package to industry in the form of revenue forgone and reduced/deferred taxes. Hopefully they won't get tainted with a 26 lakh crore "scam" of providing undue benefit by the CAG but you never know.

Other than that, the massive $45 Billion annual remitances by migrant workers to India and the fact that Indian banks were restricted from mortagaed backed securities or CDS. Not to mention that Indian companies were able to grab larger market shares in the GCC / ME, Africa and latin America regions.

 

[Mad Indian]

Qualified Economists should be able to explain this better that I, but the way I think it works is that GDP is calculated for each country in its local currency - for India this is in Rupees. This is Nominal GDP in Rupees and this is what is growing at 7%. To compare this with other countries, typically this is done by converting to dollars - i.e Nominal GDP in dollar terms. But a dollar can by you a lot more food and services in India than say in the US or Europe - so Economists come up with an adjusted GDP figure to take into account the relative cost of living for each country - this is called the PPP figure.

I know what is PPP. It is also the real measure of the actual GDP growth. The Growth of 8% refered here is Real gdp growth which is the GDP growth in PPP not Nominal GDP. The Nominal GDP for India is actually about 15-20%. Thats what i said.

About the bold part- NO. the Constant prices growth is at 7%. The growth at current prices will include the 8% inflation too. Hence the Nominal GDP growth will be 8%+7%(Real gdp + inflation) that is 15% GDP growth

Theory says that eventually India's Nominal GDP (in dollar terms) should increase at a faster rate to catch up with PPP GDP, because as India does so well the value of the Rupee should rise against the dollar - so your 15-20% makes sense.

Thats what i meant- If inflation and stuff is around 5% per annum on average and growth is at 8%, then by 2050, they will nearly be same- .ie Nominal and PPP GDP:bounce:. That is the real growth will be 8% and Nominal growth will be 15%. and so, the Nominal gdp will be similiar to PPP gdp by then

Only problem is I thought the Rupee has fallen over the past year???

Blame it on the CONs and their screw ups with their good for nothing Subsidies and others- triggering inflation and fall in rupee.

But in any case even at 7%, India's economy still doubles every 10 years, so I would not turn my nose up at it. With the approriate investment in Industry and Infrastructure this can be improved upon.

Actually, if we have a very efficient govt, we can even grow at 10% + for even decades- look at gujarat. So fcuk these UPA and bring in Modi and we will get 10% growth

 

[Mad Indian]

1997- Asian Financial crisis
1998- Nuclear Sanctions
2001- Bhuj earthquake
2002- Drought
2002- Operation Parakram

They had plenty to go around. Comparatively we breezed through the economic shocks going on now.

P2P sir you left out the Kargil war . also the NDA did very constructive approach with good infrastructure investment for the future growth prospects which the UPA was able to make use of and show a 8% growth. Then they failed to do what NDA did - invest in the infrastructure and other industry friendly stimulus and rather wasted all the money on subsidies like Useless MNREG and others. All it did was to trigger inflation.

 

[Mad Indian]

Since 2008, China has been on a lending binge. The economy has become so inefficient it costs $5 of spending to make $1 of GDP growth. Current state liabilities range anywhere from 135% to 180% of GDP. Local government debt is twice the estimated $1.7 trillion and actually $3.4 trillion, 40-50% of GDP just in that. Railway Ministry owes nearly $400 billion, the highway debt is just as big. Half of the SOEs are losing money and keep taking out loans to bail themselves out. CCP is on the hook for all of it. It is truly a Japanese style stagnation in the making.

This is exactly what UPA is presently taking India to. Usless debts with no usefull investments.

 

[Godless-Kafir]

All of us would be in our 70s or 80s..what would it matter to us by then! lol

 

[Mad Indian]

Who knows if UPA or NDA will even exist by then. But UPA has maintaed an average of 8% over the past 8 years and that is DESPITE the GFC shock aka the Great Recession. Somthing which the NDA never had to contend with.

What about the war they faced in 1999? It was not a challenge?

This shows that as long as the basic policies of removin poverty, building infrastructure and minimal govt. interference in free makets is adhered to; we can make sure that the 7-8% GDP gorwth rate is maintained for the next 3 decades.

WTH sir. The CONs do nothing other than taxing us indirectly and paying off lavishly to lazy craze assed poors(who rather spend their money on alchohol than improveing their lives). This is what you call as free market? Do you know how difficult these bastards CONgis have made it to do business? We are having Socialism 2.0 from UPA? Please do go and read the Union Budget 2012 thread . Stop defending this good for nothing,pathetic loser, spineless govt called UPA

In any case, apart from the govt., its the fundamentals that give India its positive advantage. We will have a growing workforce which should keep wages down unlike other countries which either already have declining workforces like EU and Japan or will soon have declining workforces like China.

And nothing is being done by the UPA to take advantage of this demographic divident. Many of the NDA's programs were highly futuristic(river water linking, Golden Quadilateral, etc) and pro industry which thought about the improvement of Infrastructure and other fundamentals. Please state how the UPA has fared in those terms.

You do seem to know what is important for sustaining growth-that is fundamentals.But the UPA is doing nothing on improving it other than the TINKERING and Painting jobs like MNREG and you are defending the UPA . why?

Just trying to eliminate poverty and make sure every Indian can earn more than $2 per day would be enough to push our economy to no.2 status.

Agreed thats why we have to kick these UPA bastards out of power. These UPA bastards thrive on Ignorance and poverty. They will not let the country improve. They will fudge the reports about poverty with their paid media and will tax the workers and use it pay for the lazy assed pigs,

Governments don't have to be super-smart to do this, even average performance and minimal interference in free markets will do as long as no major disasters happen.

Exactly . But we cant have this super intellgent UPA for power either. These bastar*s keep the poor as poor so that they can continue in thier poverty. Only the middle class(that too only the sane ones) care about their looting of India on grand scale. I dont think these CONgi pigs will want poor to become middle class and start questioning their loots.

And i hate the middle class i****s who continue to support these CONgi bastar*s despite their massive scams. The only thing these UPA pigs are good for is minority appeasement and useless subsidies aimed to hide away their massive scams

Just quoting the FM on this issue

By FM if you meaning that spineless swine Pranab mukherji, you can keep those quote to yourself

 

[p2prada]

What I mean is things happened outside the control of the govt, any govt. We weathered all of this because our fundamentals were strong enough to survive the shock regardless of which govt was in power. All thanks to MMS's policies in 1991 and it's subsequent reinforcement over 20 years.

 

[p2prada]

P2P sir you left out the Kargil war .

Fvking hell I deserve to die.

also the NDA did very constructive approach with good infrastructure investment for the future growth prospects which the UPA was able to make use of and show a 8% growth. Then they failed to do what NDA did - invest in the infrastructure and other industry friendly stimulus and rather wasted all the money on subsidies like Useless MNREG and others. All it did was to trigger inflation.

The Golden Quadrilateral project was a boon to the people.

@Ejazr

The 2002 drought was really bad for the economy. The other factors plaguing our MEA's decision making did not help tide over this situation either. People who do not contribute as much to our GDP(farmers) were badly hit. In a few years there were a spate of suicides among farmers and all related to the loans they were forced to take during the drought in 2002-03. Simply because they have the smallest contribution to GDP, their economic hardship did not affect our GDP statistically. But growth was 4.3%(over the top of my head) during that time.

Our lowest growth during the current crisis was over 6%. Still the second fastest.

 

[trackwhack]

Yes. PPP is very important. But it is also important to look at Nominal GDP. You need to look at both sides of the coin. PPP gives you local consumption - roti kapna aur makan but Nominal GDP buys you overseas armaments and technology - Rafles, C17s etc

At PPP India is 4th in the world, but at Nominal GDP India is something like 8th in the world, somewhere just behind the UK. Therefore on the international buying power stakes India is not as wealthy as PPP would suggest. Although it is fair to say that provided India keeps improving PPP, Nominal GDP will eventually catch up.

While your text book understanding of definitions are accurate, like most mugpots, you have hardly a clue about what you are talking about. If you extrapolate technology growth at the same rate as real growth, India will surpass the West well before 2050. Military commerce would have turned 180 from India's perspective, we would be a net importer of arms and many of our customers may well be our current suppliers.

 

[tony4562]

India is not 8th on the nominal GDP list, she was no.9 or no.10 on the 2010 list. Now with rupee losing like 20% of its value the past year, India's GDP probably has fallen out of the top 10 for 2011.

Guys here are predictably optimistic (when it comes to making predictions), but just to serve a reminder: til this day only countries with pale-skinned people (of northern european origins and north-eastern asian origins) have managed to industrialize, no exceptions. Also a little observation, among ASEAN countries whose economies are invariably controlled by chinese, GDP per capital is directly proportional to the percentage of ethnical chinese of the local population.

Chinese popl as percentage Nominal GDP per capital
Singapore 74% $50000
Malaysia 23.7% $8000
Thailand 14% $5000
Indonesia 3% $3000
Cambodia 1% $1000


All those lofty predictions for India might just come true, but its an uphill battle I would not bet on.

 

[Yusuf]

As long as there is growth in terms of Rupees, then it does not matter to India. Currency fluctuations are part of the game. If the people have money to spend which in turn keeps the economy growing, other things will fall into place.