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Old 26-10-2010, 08:53 PM
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Default Goldman Sachs: India - One of Three Largest Economies by 2040

Goldman Sachs research writes that India is forecast to be one of the three largest economies in the world by 2040.

It is the only BRIC (Brazil, Russia, India and China) country that is expected to grow 5% for the next 45 years.

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5% for the next 45 years projection ? That would be too optimistic, that for such a long period.
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Old 26-10-2010, 09:02 PM
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They make such statements to facilitate bubbles (remember 200$/bbl oil?)
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Old 26-10-2010, 09:10 PM
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My personal feeling that India is definitely capable of being one of the larger economies in this world. We have a huge population, decent natural resource reserves and a very young population at this point.

Now only if the people in the government stopped being short sighted and if we had genuine leaders capable of thinking on a longer term than the 5 year election cycle.

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Old 26-10-2010, 09:32 PM
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Govt isn't as much of a problem as far as industry is concerned Money/cuts will keep them on the right track (on the policy front) But natural resources would be a big prblm I wonder if it'll last 45 yrs (would get too costly even if they do) Plus with a 200Cr (or God knows how much higher) population, will we have the land to expand further? Will the country be livable at all? What will the subsidy burden be to provide free food, shelter, health, education etc. for so many (that alone could kill us) + pension for a HUGE no. of (longer-living) aged population.

The 2040 projection is ok though.
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Old 26-10-2010, 09:51 PM
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I think it is based on their earlier report of 2003 ( Rupa Purushotthaman and another).

I remember Economic Times has come out with a projection of 2,80,000 sensex by 2050 based on that report.
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Old 26-10-2010, 10:07 PM
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Originally Posted by kkseal View Post
Govt isn't as much of a problem as far as industry is concerned Money/cuts will keep them on the right track (on the policy front) But natural resources would be a big prblm I wonder if it'll last 45 yrs (would get too costly even if they do) Plus with a 200Cr (or God knows how much higher) population, will we have the land to expand further? Will the country be livable at all? What will the subsidy burden be to provide free food, shelter, health, education etc. for so many (that alone could kill us) + pension for a HUGE no. of (longer-living) aged population.

The 2040 projection is ok though.

We need to understand one thing here.. A larger population would mean more pressure on resources, but also a larger workforce. At the end of the day if you get down to the very basics, you will see that productivity of an economy can be expressed as per capita productivity x population. We are already a big economy due to the huge population we have. And we are far behind the leaders in terms of per capita productivity. The day we approach that level, will be the day when we really need to bother about long term economic slowdown.

As for natural resources, there are countries like russia with huge natural resource reserves and very low population. They will become rich selling their resources to countries like India, Japan & China.

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Old 26-10-2010, 10:40 PM
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Originally Posted by no1lives4ever View Post
We need to understand one thing here.. A larger population would mean more pressure on resources, but also a larger workforce. At the end of the day if you get down to the very basics, you will see that productivity of an economy can be expressed as per capita productivity x population. We are already a big economy due to the huge population we have. And we are far behind the leaders in terms of per capita productivity. The day we approach that level, will be the day when we really need to bother about long term economic slowdown.

As for natural resources, there are countries like russia with huge natural resource reserves and very low population. They will become rich selling their resources to countries like India, Japan & China.

-- no1lives4ever

'And we are far behind the leaders in terms of per capita productivity.' Why? (despite having a larger population)

Productivity can also be achieved harnessing technology. A huge population keeps manpower costs low where manual labour (blue or white collar) is necessary (with the rider that more & more of the workforce can be brought into the skilled domain, where manpower costs are the highest); but beyond a point it gets self-defeating coz i) there's a limit to how much an economy can grow & accommodate (with enough remuneration for decent living) due to constraints in other areas ii) the ones that cannot be accommodated become a burden for the state (steadily increasing its deficits).

Take a resource like coal or iron ore Is there enough reserves worldwide to sustain growth in 6 continents? (it's not as if India is the only country that'll be growing) Oil, by many estimates, has already peaked (i.e. the incremental supply will no longer match the incremental demand).

However, technology will come up with solutions to many such problems (but that's the strength of the West Do we have the money & foresight to invest in R&D today? 2Rs kilo rice/wheat, rural employment guarantee, kerosene/diesel subsidy etc. takes up the largest chunks of our budgetary spending Just think what the bill for subsidies/freebies will be in future with a 200Cr population) On the other hand, technology may (& probably will) reduce the need for manpower in many areas.
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Old 26-10-2010, 11:19 PM
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Originally Posted by kkseal View Post
'And we are far behind the leaders in terms of per capita productivity.' Why? (despite having a larger population)

Productivity can also be achieved harnessing technology. A huge population keeps manpower costs low where manual labour (blue or white collar) is necessary (with the rider that more & more of the workforce can be brought into the skilled domain, where manpower costs are the highest); but beyond a point it gets self-defeating coz i) there's a limit to how much an economy can grow & accommodate (with enough remuneration for decent living) due to constraints in other areas ii) the ones that cannot be accommodated become a burden for the state (steadily increasing its deficits).

Take a resource like coal or iron ore Is there enough reserves worldwide to sustain growth in 6 continents? (it's not as if India is the only country that'll be growing) Oil, by many estimates, has already peaked (i.e. the incremental supply will no longer match the incremental demand).

However, technology will come up with solutions to many such problems (but that's the strength of the West Do we have the money & foresight to invest in R&D today? 2Rs kilo rice/wheat, rural employment guarantee, kerosene/diesel subsidy etc. takes up the largest chunks of our budgetary spending Just think what the bill for subsidies/freebies will be in future with a 200Cr population) On the other hand, technology may (& probably will) reduce the need for manpower in many areas.

I think we need to take this discussion to a different thread.

There is no doubt that India has problems, but I feel that the sheer size of our population along with very low average age makes India one of the best candidates for future growth.

Democracy, freedom of press and capitalism are ideals which will form the base of the future India. We are already witnessing both the good and the bad parts of the economic liberalization that started in 1990s. Wait for another 20 years and things will definitely look a whole lot different.

One very big plus point for the Indian economy is that unlike a lot of other growing economies, we have a huge internal market. This along with the fact that we have powerful industrialists will ensure that things like infrastructure & government will get better over time.

Indian industry has shed its india only approach and indian industry is already competing at the world level. You can not continue to compete at the world level based out of a country with poor infrastructure, more corruption and higher taxes for a long time. And the trend is already visible here. Infrastructure is being built, government is concerned a lot about the economy and while corruption is not going down, it receives widespread media attention.

In the next 20 years we might be living in a very different India when compared to what we have today.

My only major worry about India is with respect to the way we Indians tend to think in general. No one bothers about doing a good job or getting a good education. Everyone seems to want the easy way out. We do not really have a culture of hard work and professionalism. This is one of the major things that holds India back, and in my opinion, not the other reasons we are really discussing here.

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Old 26-10-2010, 11:35 PM
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Quote:
In the next 20 years we might be living in a very different India when compared to what we have today.

No doubt about that.

But the fact remains, unless population growth stabilizes at some point (as it well might - good things here happen despite the govt not because of it ), it'll continue to become a bigger & bigger burden (on the exchequer, on the environment, living conditions etc.).

Advantage wise - younger demographics : yes, ballooning population: no.
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Old 26-10-2010, 11:45 PM
kkseal kkseal is offline
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Originally Posted by no1lives4ever View Post
...
My only major worry about India is with respect to the way we Indians tend to think in general. No one bothers about doing a good job or getting a good education. Everyone seems to want the easy way out. We do not really have a culture of hard work and professionalism. This is one of the major things that holds India back, and in my opinion, not the other reasons we are really discussing here.

-- no1lives4ever

On the contrary, the avg Indian works harder than their Western counterparts (& that too for much lower salaries/wages) Frivolous activities are much less. Education wise, there's no dearth of degree holders in India (this is one area where we will certainly leave the West behind by far in future), but the quality of education is avg to poor nor is it as widespread as it ought to be.
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