Indian economy 'to overtake UK' (India finally picking up steam).

BBC ^ | Wednesday, January 24, 2007

[Jedi Master Pikachu]

India could overtake Britain and have the world's fifth largest economy within a decade as the country's growth accelerates, a new report says.

If trends continue, India's economy may then surpass the US and be second only to China's by mid-century, the report by investment bank Goldman Sachs says.

Manufacturing has helped to drive India's economy

The report says India's programme of reforms has brought increased competition and efficiency.

But there will be a heavy cost as India demands more and more energy.

Boom time

Everywhere you turn in India's cities are signs of economic boom.

The implications of projections are that India will overtake the G6 economies faster than envisaged Goldman Sachs report India's IT revolution Globalisation shakes world

New cars choking the streets, middle-class housing and shopping malls swallowing up farmland, airports chock-a-block with travellers.

But this is probably only the start of a transformation that will reshape the global economy.

Within a decade India can overtake Italy, France and the UK to become the world's fifth largest economy if it keeps up it's current pace of expansion, according to analysts at Goldman Sachs.

India has shifted into a higher gear, they believe, because a decade of reforms have opened the country to greater competition, and spurred industries to become more efficient.

By 2050 India's economy could be larger even than America's, only China's will be bigger, the bank predicts.

The result will be huge demand from this new giant.

Within 15 years Indians should, on average, be four times richer than today, buying five times as many cars, and the country will burn three times as much crude oil to power its growth, putting yet more strain on the world's resources.

Potential

But India could also be held back.

The country's poor infrastructure is already struggling to keep up with growth, power cuts are common as there isn't enough electricity to meet current demand, ports are overflowing, many roads pot-holed and crumbling.

And a shortage of skilled workers may undermine the future expansion of India's much-vaunted IT industry.

However, other nations are increasingly waking up to the potentially vast market India holds. Last month the largest-ever American trade delegation to India spent two weeks searching out opportunities.

They were followed by a British group 150-strong led by the finance minister, Gordon Brown.

And the Russian President, Vladimir Putin, is to visit this week where he is pressing for major contracts providing nuclear power and defence equipment.

[Jedi Master Pikachu]

ping.

[Jedi Master Pikachu]

The article was written by a "Damian Grammaticas." It should have been put in the author box, but obviously wasn't.

[agere_contra]

It's good news for the Anglophone west that India is doing so well. Though I doubt trends will continue on a straight line until 2050 - that's not the way the world works.

[relictele]

Walk through central London, look at the proprietors of off-licences, newsagents and food vendors and you will see that the Indian economy has already taken over!

[SomeoneNeedsToSayIt]

Though I doubt trends will continue on a straight line until 2050 - that's not the way the world works.

EXACTLY!

Today the U.S. economy is 10 times the size of China. We are growing about 3% per year. It will be some time before either China or India overtakes the U.S. I suspect we'll see the laws of diminishing returns slow growth in both India and China.

[Jedi Master Pikachu]

Concur with your second sentence. The idea that India (or the PRC) can keep growing at around 10% a year for some 40 more years probably won't come to fruition.

[Jedi Master Pikachu]

Another reason for an Enlarged United States of America.

The PRC and India might beat the United States economically by 2050, but they are not projected to beat NAFTA within the century (NAFTA also has a higher GDP than the EU).

[MimirsWell]

Even 10 years is a long time. A lot can change in that time, usually in the negative sense. I am loathe to compare economic sizes of countries as far different as UK and India. 1/3rd of humanity has never been well off in history. Most economc models, the chaos theory and Murphy's law will kick in much before.

As symbolic as it may be, how can we compare a country whose population size is less than most of the medium sized states in India.

[driftless2]

Well as Tom Friedman would like to do let's tell India to stop this great economic expansion now so we can all enjoy temperatures that will be one degree cooler by the end of the century. India wants to rise out of dire poverty? I say, in the name of colder weather let the Indians live lives of poverty. Phooey on poor countries improving their lot through capitalist measures. Indians should enjoy their previously near-starvation existence for the sake of mankind. And Tom Friedman. (/sarcasm)

[MunnaP]

Jedi master,

Here are some facts for your home page about India if you are interested in updating your home page...

India has almost the same amount of cultivable land as that of united states...Source CIA factbook...
India size slightly more than one-third the size of the US
India arable land: 48.83%
USA arable land: 18.01%

Most of the cultivable land in India is not snowbound in winter...It is feasible to cultivate land 2-3 times to get 2-3 crops in a year..provided water availability...

India Desert area is very small.. less than 1/10 of the total.

India border disputes are not about utter pradesh..it is about arunanchal pradesh..Those two places are 1000 miles apart...

As weather is more temprate than USA, india per capita energy requirement would never approach to that of USA..For example 70% of population of India would never need home heating...large areas would not need home cooling either...
The trend of suburbanization has not picked up until recently and the energy situation would deter it..Transportation fuel requirement would not approach that of USA...

One statement made me laugh...That is the 'population is densely packed areas that are easily bombed'...I cannot think of a scenario of USA bombing India....What are you gonna do ..Bomb American assets strewn all over the place ??
The presence of American companies is so pervasive in India, I don't think the Coca cola company is gonna let you bomb anything...just kidding...kinda absurd...

[Gengis Khan]

"that's not the way the world works."

Tell us how it works.

1. Law of diminishing returns applies to products and services not to economic growth or else US economy itself would have been decelerating long ago.

2. Goldman Sachs prediction about Indian & Chinese economy going ahead of US economy has already taken into account the fact that US is growing at 3%. Even Europe is growing at 3%. India is growing at 8% and China at 9%.
The time frame we are talking about is 2050.

[Gengis Khan]

"they are not projected to beat NAFTA "

NAFTA??
Canada + Mexico ???!!!! LOL!

The yearly increase in population in India equals the population of Mexico. And we are already way past Canada's economy, not in terms of per capita but that only indicates more potential to grow.

Among developed countries, the country with the largest population will have the biggest economy. Which is why US was so far the biggest economy, bigger then Japan and Europe; India and China are not developed countries. By 2050 that will change.

[Jedi Master Pikachu]

Population does strongly affect economic size--which is the primary reason for Mexico (and Canada) to become part of the United States. Also big is land area (something in which India can't compete with either the USA and the PRC). While many more American babies would (more than the combined Mexican, Canadian (if they became American today), and American increase) be helpful, you still have some work with feeding yours.

India is supposed to be 1.6 billion in 2050, the NAFTA countries, around .6 billion. There is no argument that India has the larger population. However, a culture has to be kept intact. Having the United States absorb Canada (and especially Mexico) is a pretty big bite as it is. Even if countries were flocking to become American states, the United States should not let all and sundry come.

[Jedi Master Pikachu]

Do you know Mexico's population? It's around 110 million (.11 billion). India is not growing by that much per year (they've been at around 1.1 billion for some years).

[Gengis Khan]

If you are arguing land area, then read post #11, more than answers your question. Remember, its not the size of the land mass on paper (pure sq miles) but "cultivable land" that matters. India has more. Canada is 60-70 percent ice and large parts of Mexico is desert.

If you are arguing population remember, it not "babies" thats making the American population grow. Emigration from other countries is increasing US population. Since the 90s only three major countries China, India and Mexico have been largely contributing to American population. Emigration to US will takes place only so long as US economy is relatively more attractive, but that is likely to change in case of both China and India. And the flow of emigration will probably reverse.

[Gengis Khan]

"you still have some work with feeding yours."

Yes, which is why we are still in the league of developing countries and American (for now) is the biggest economy. And its not shortage of food but distribution combined with the fact that many in India lack the purchase capacity, that is the basic problem. India produces enough to feed all of India three times over.

We are looking at a time frame of 2050 by when we will have not only solved the above problem but also joined the club of developed nations.

[Gengis Khan]

Sorry I was talking about Canada's population but wrote Mexico instead. Its a saying in India "We are adding a Canada each year to our population".

My bad.

[Gengis Khan]

One more issue is if you are considering the hypothetical case of NAFTA becoming a economic/political entity why not compare it with SAARC? The entire South Asia combined will have much more population and arable land then what the NAFTA can add.

Personally I seriously doubt US can absorb Mexico, and its not just cultural or linguistic factors (which are no doubt a cause for serious divide) but also economic reasons. Absorbing a poorer country, one-fourth the size of US and with a large number of unemployed youth, will face massive resistance in the US Congress.