Understanding the Potential Impact of India's Economic, Political, and Cultural Environment

1. October 4, 201143rdAnnual Corporation Education DayWartburg College Understanding the Potential Impact of India’s Economic, Political and Cultural Environment Surekha Rao President, Indiana Academy of the Social Sciences Indiana University Northwest, Gary, IN Corporation Education Day Keynote Address

2. In Mark Twain’s words (1910) • India is, the cradle of the human race, the birthplace of human speech, the mother of history, the grandmother of legend, and the great grand mother of tradition. Corporation Education Day Keynote Address

3. India in 2011 • India is a multi-lingual, multi-religion, multi- cultural country • One of the fastest growing economies in the world • Home to 1.21 billion people (17% of the world) • Continues its tradition of secularism and democracy Corporation Education Day Keynote Address

4. Five main parts of my talk • Cultural Heritage of India and Modern India • Indian Economy and its global implications • Business Climate of India • India’s Domestic Political Environment • Indo-US relations and why India matters Corporation Education Day Keynote Address

5. Cultural Heritage: India, an old country but a young nation Indus Valley Civilization 3000 BC: 5000 years old Soap Stone Seals used in Trade Corporation Education Day Keynote Address

6. The Aryans and the Vedas 1500 BC-800 BC: Vedas and Upanishads 800-400 BC Ramayana and Mahabharata Corporation Education Day Keynote Address

7. Foreign Invasions • Arabs, Afghans, Mongols since 11th century • Europeans arrived in 1498 followed by the Dutch, the French, and the British. Corporation Education Day Keynote Address

8. Modern India • India got independence from the British rule August 15, 1947: a young nation of 64 years! Corporation Education Day Keynote Address

9. Architects of Independent India • Mahatma Gandhi • Jawaharlal Nehru • Economic policies promoted self–reliance and were inward looking • Average growth rate 1950-1990 was 3.5% Corporation Education Day Keynote Address

10. 1991: India Changes Course Corporation Education Day Keynote Address

11. India now: a Fast Growing Economy • India’s GDP 2010= $1.53tr • World Rank 12 US Rank 1 • Share of the World GDP= 2% • GDP Growth rate 2004-2009: 9% 2009-11: 7.9% Corporation Education Day Keynote Address

12. IMF ‘s GDP growth outlook for India & USSeptember 2011 Corporation Education Day Keynote Address

13. GDP (Purchasing Power Parity) Measure of growth based on what the currency can buy and not the exchange rate • GDP( PPP) = $4.3tr • World Rank 4 (after US, China and Japan ) Corporation Education Day Keynote Address

14. India’s growth trajectory (2001)Jim O’ Neill, Goldman Sachs Corporation Education Day Keynote Address

15. GDP(PPP) Growth Trajectory (2009)(Citi financial services report) • India will overtake Japan by 2015 to become the third largest economy • India would surpass the US — currently the world’s largest economy — to become the second largest by 2040, next only to China. • By 2050, Indian economy is expected to be nearly $85.97 trillion on PPP basis and become the largest economy ( overtake China). Corporation Education Day Keynote Address

16. Other Economic Indicators • Unemployment rate = 6.6% • Public Debt as % of GDP = 56% • Foreign exchange reserves= $284 b Corporation Education Day Keynote Address

17. Transport and Communication Indian farmer with a cell phone! Growth of cell phone sector Number of mobile phone users= 670 millions Demand for New Telephones/month= 5 million Corporation Education Day Keynote Address

18. India: Not an Agricultural Economy anymore! Composition of GDP • Services = 65.0 % • Industry = 20.1 % • Agriculture= 14.9% (data from Reserve Bank of India) Corporation Education Day Keynote Address

19. IT: The New Temples of India • BPO call center WIPRO INFOSYS Corporation Education Day Keynote Address

20. Major Business Centers in India : located all over the country Patna Ludhiana Gurgaon New Delhi Noida Guwahati Jaipur Ahmedabad Gujarat Kolkata Indore Ranchi Mumbai Bhubaneshwar Bengaluru Hyderabad Kerala Kochi Chennai Corporation Education Day Keynote Address

21. Business climate: Advantage India • Huge untapped market potential • Business friendly government policies: tax incentives, currency convertibility • Low cost competitiveness : $33.53 vs.$1.17 • Large English speaking and skilled manpower • Strong macro economic fundamentals • Political stability Corporation Education Day Keynote Address

22. India CallingIndia’s thriving middle class Growth of HH Incomes over 5% • By 2025 number of middle class to reach 583 million • India is currently the 12th largest market • By 2025 it will be Fifth largest behind the United States, Japan, China, and the United Kingdom. Corporation Education Day Keynote Address

23. Industries most in need of growth • Food and Beverage • Alcoholic Beverages • Apparel • Housing and • Utilities • Infrastructure Corporation Education Day Keynote Address

24. Urbanization : New Engine of Growth • By 2030: • 68 cities over 1 million population (42 today) • 70% of the Jobs; 70% of the GDP from the urban centers Corporation Education Day Keynote Address

25. India’s infrastructure needs • By 2030 • 700-900 million square meters of commercial and residential space (a new Chicago every year) • 2.5 billion square meters of roads 7,400 km of metros and subways • $1.2 trillions investment needed Corporation Education Day Keynote Address

26. Business Friendly Government Policies: Taxes Domestic International INDIA - US TAX TREATY Tax rate for US companies Dividends 15% 1 Interest Income: 15% 2 Royalties 20%2 Technical Services 20% 2 Other income 55%   • Highest marginal Income tax rate= 30%(down from 95%) • Customs and Tariffs= 10% (down from 150%) Corporation Education Day Keynote Address

27. Indo-US Trade: India’s Exports Export Items Gems and jewelry Petroleum Transport equipment Drugs Pharmaceuticals Machinery • Total Exports to the US 2010 = $ 29.5b • 13% of India’s exports • US Rank 2 (UAE is Rank One) Corporation Education Day Keynote Address

28. Indo-US trade: India’s Imports Precious stones & metals Machinery Electrical machinery Aircraft, spacecraft Optical instruments & equipment Mineral fuel, Oil, etc. Fertilizers • Total Imports from US= $19.2 billions • 7% of India’s imports • Rank second largest after China Corporation Education Day Keynote Address

29. Government Policies: Liberalization of Foreign Exchange Rules • Rupee is freely convertible on current account. • Rupee is almost fully convertible on capital account for Foreign Institutional Investors. • For FDI- Profits earned, dividends and proceeds out of the sale of investments can be fully repatriated. Corporation Education Day Keynote Address

30. What is your Dollar worth in Indian Rupees? • $ U.S. ≈ Rs. 49.42 In real terms: • US Big Mac can buy a little more than 2 Maharaja Macs ( India’s Big Mac) Corporation Education Day Keynote Address

31. India’s Political Climate • Secularism and Democracy can be traced through the ancient cultural times: SEN • Parliamentary Democracy ( British style): Prime Minister Dr. Manmohan Singh is the Executive Head • Federal Republic: States have less autonomy • Politically Stable ; Peaceful transition of power • Corruption: Hot issue Corporation Education Day Keynote Address

32. Indo-US relations • The two countries have shared values of secularism and Democracy • US- India cooperation in Defense, Space and Technology • All three US Presidents since 2000 have visited India and the last Two Indian Prime Ministers have visited US to expand trade and friendship Corporation Education Day Keynote Address

33. India and geopolitics Does India matter to the US? • Yes: It is one of the largest and fastest growing economies; member of G-20 • Yes: because it is the largest democracy in the world and a peaceful country • Yes: To maintain balance of power in Asia: to contain China Corporation Education Day Keynote Address

34. Challenges facing India • Lack of proper Infrastructure • Persistent High inflation( double digit) • Rampant corruption • High levels of (female) illiteracy • Poverty: 400 millions ($0.64/day) • Inadequate Public Health System Corporation Education Day Keynote Address

35. Some Useful Resources 1. Embassy of India http://www.indianembassy.org/doing-business-in-india.php; http://www.india.gov.in/ 2. World Bank Reports Http://www.doingbusiness.org/reports 3.Mckinsey Global Institute http://www.mckinsey.com/mgi/publications/india_urbanization/index.asp 4. National Portal of India http://www.india.gov.in/ 5. The Argumentative Indian: AmartayaSen Corporation Education Day Keynote Address

36. "Oneness amongst men, the advancement of unity in diversity – this has been the core religion of India”. Rabindranath Tagore Poet laureate in literature in 1913 (1861­- 1941) Corporation Education Day Keynote Address

37. To Wartburg Community Thank you You can always reach me at skrao@iun.edu Corporation Education Day Keynote Address

38. NAMASTE Corporation Education Day Keynote Address