High Commission of India London

1. High Commission of IndiaLondon Presentation by High Commissioner Dr. J. Bhagwati Dialogue With India Series II India House, May 21 2013

2. KaminiBanga, Distinguished guests, my Lords, Ladies and Gentlemen, • At the outset, I want to thank Kamini for taking the initiative to bring us all together today.     Kamini and I were in the same Physics (Hons) class in Delhi University. She was in Miranda House an all-girls college and I was in St.Stephen’s an all-boys college. The University decided to put the Physics students of our two colleges together since at that time Honoursstudents had their classes in the Physics Department in Delhi University. I cannot say how much physics the students learnt but there seemed to be a lot of chemistry between the boys and girls • It is a cliché yet true that India lives in several centuries. It is also a cliché that whatever you say about India or Indians, the opposite is also usually true. For example, while 26% of our population is still illiterate, we have very sophisticated Space and Nuclear Power Programmes • I would like to begin with a historical overview of the Indian economy. And, I will use both graphs and tables

3. I want to emphasise that although I will go back 300 years in time this is not to make excuses for India or make a case for Indian exceptionalism • I will also present projected growth rates for India, other emerging economies and developed countries. Again, this is not to divert attention from the many shortcomings and difficulties that we are currently facing • Incidentally, to the extent possible, for the supporting data I have used multilateral sources such as the IMF • Inter-country comparisons can be questioned on the grounds that the underlying data is not comparable. In that sense a better way to evaluate India’s progress is to compare and contrast its economic indicators across time and not across countries

4. India’s ranking in world population and GDP over the last three hundred years • India plus China had about half the world’s population and produced over 40% global GDP in the early 1800s • India’s GDP share steadily declined over the next 150 years • The two economies have raised their share of global GDP in last four decades

5. India is home to 1.2 billion people, which is about 17.4 % of the global population • However, it accounts for only 5.4 % of world GDP • Hence, India has some catching up to do

6. India is in Transition • It is a relatively young country even though it has an ancient and continuous civilisation • Historically there have been serious social and economic imbalances • Employment guarantee law has given livelihood security to people at the bottom of economic pyramid • Right to Information and our media has given voice and access to most citizens • Current inconsistencies between intentions and outcomes are part of processes which will lead to enhanced transparency and hence improved governance

7. Source: World Economy by Angus Maddison, OECD and IMF (2010 data)

8. Annual Average GDP Growth Rates (%) Source: World Economy by Angus Maddison OECD and IMF (1998-2010 data)

9. Annual Average GDP Growth Rates (%) Source: World Economy by Angus Maddison, OECD and IMF 8B

10. India per capita GDP growth Source: Economic Survey 2012, Govt. of India

11. India Per Capita GDP Source: Economic Survey 2012, Govt. of India 9B

12. India Average Annual Growth Rates Source: World Economy by Angus Maddison OECD (1900-1947) and Economic Survey 2012, Govt. of India (1947-2010)

13. India Average Annual Growth Rates: Population and GDP% GDP Source: World Economy by Angus Maddison, OECD (1900-1947) and Economic Survey 2012, Govt. of India (1947-2010). 10B

14. India Social Indicators Source: Economic Survey 2012, Govt. of India

15. India Social Indicators Life Expectancy yrs Life Expectancy, Literacy Rate Population (millions) Literacy Rate % Source: Economic Survey 2012, Govt. of India 11B

16. Economic Indicators India & Emerging Economies Source: IMF and US World Fact Book

17. Economic Indicators India & Emerging Economies Source: IMF and US World Fact Book *These numbers are not strictly comparable

18. Economic IndicatorsIndia & Developed Economies Source: IMF and US World Fact Book

19. Economic Indicators India & Developed Economies Source: IMF and US World Fact Book *These numbers are not strictly comparable

20. IndiaForex Reserves Source: RBI & OECD

21. GDP Growth Projections next 5 Years(%)India & Emerging Economies Source: IMF

22. GDP Growth Projections next 5 Years (%)India & Developed Economies Source: IMF

23. GDP Growth Projections Next 5 years GDP Growth Rates % Source: IMF 18B

24. Trade in Goods & Services Source: IMF, IAEA & Space foundation

25. Defence and Technology Budgets Source: IMF, IAEA, Space foundation

26. India’s Key Output Indicators Source : RBI & Economic Survey 2012, Govt. of India

27. India – Opportunities Infrastructure Source: India Brand Equity Foundation

28. India Opportunities Infrastructure • Under NHDP-VI 1000 km of expressways envisaged with investment of $ 3 billion • Expansion of port traffic from current 800 MT to 2500 MT by 2020; investment of $ 13.58 billion during 2012-17 • India’s urban population projected to reach 600 million by 2013

29. India OpportunitiesHealthcare • Annual growth rate of 20%, expected to reach $ 280 billion by 2020 (The Indian healthcare sector is estimated to reach US$ 100 billion by 2015, growing at 20% year-on-year (y-o-y), as per rating agency Fitch) • Central Government budget on healthcare to double to 5% of GDP during 2012-17 • Cost efficient medical tourism destinations expected to grow at Compound Annual Growth Rate of 27 % during 2011-15 Source: India Brand Equity Foundation

30. India OpportunitiesManufacturing • The small and light commercial vehicle segment expected to grow at 18.5% Compound Annual Growth Rate (CAGR) over next 5 years • Auto component industry expected to reach a turnover of $ 113 billion by 2020 from $ 43 billion currently • Radial tyre market expected to reach $ 7.3 billion by 2015 growing at CAGR 21% Source: India Brand Equity Foundation

31. India OpportunitiesRetail Source: India Brand Equity Foundation

32. India OpportunitiesMedia and Entertainment Source: India Brand Equity Foundation

33. India OpportunitiesBiotechnology & Pharma • Biotech industry currently at $ 4.3 billion is expected to reach $ 11.6 billion by 2017 • Pharma sector expected to grow to $ 74 billion by 2020 from current level of $ 11 billion sales Source: India Brand Equity Foundation

34. India OpportunitiesEducation, Research and Development(ER&D) • Education market size expected to reach $ 112 billion by 2015 • Leading offshore destination in delivering engineering R&D services with a market global share of 22% Source: India Brand Equity Foundation

35. India Risks ahead

36. India Risks Ahead

37. India Risks ahead

38. India Risks ahead

39. India Risks ahead

40. India Risks ahead

41. IndiaRisks ahead

42. Several Indian corporates have commented in the last few years that the prospects for investment in India are not sufficiently attractive. Some major business houses has invested in emerging economies and developed countries. Several of these debt driven investments now face difficulties because growth in the countries concerned was less than what was projected at the time the investments were made. This is not to suggest that Indian firms made a mistake by investing outside India. Hindsight is always 20/20 • The bottom line in India as elsewhere is: No Risk No Gain. • We should remind ourselves that when it comes to India it makes sense to take a longer term view, particularly with respect to investments in manufacturing and infrastructure

43. Thank You