indian economy outperforming other major economies - a perspective by capitalheight
TRANSCRIPT
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 1/17
Indian econom
economies - A P
outperforming other
erspective
www.cap
ajor
italheight.com
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 2/17
www.capitalheight.com
Phone- (0731)4295950
CONTENTS
Introduction
Economic Prospects for 2010
GDP growth in India
Mergers & Acquisitions in India
FII & FDI investment in India
Rural India growth story
Growth potential
India & China: A Comparison
A Comparison with BRIC andMajor economies
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 3/17
www.capitalheight.com
Phone- (0731)4295950
Introduction The economy of India is the eleventh largest economy in the world by nominal GDP and
the fourth largest by purchasing power parity (PPP). Following strong economic reforms
from the socialist inspired economy of a post-independence Indian nation, the country
began to develop a fast-paced economic growth, as free market principles were initiated
in 1990 for international competition and foreign investment. India is an emerging
economic power with a very large pool of human and natural resources, and a growing
large pool of skilled professionals. Economists predict that by 2020, India will be among
the leading economies of the world. India has witnessed unprecedented levels of economic expansion, along with countries
like China, Russia, Mexico and Brazil. India, being a cost effective and labor intensive
economy, has benefited immensely from outsourcing of work from developed countries,
and a strong manufacturing and export oriented industrial framework. With the
economic pace picking up, global commodity prices have staged a comeback from their
lows and global trade has also seen healthy growth over the last two years.
India was under social democratic-based policies from 1947 to 1991. The economy was
characterized by extensive regulation, protectionism, public ownership, pervasive
corruption and slow growth. Since 1991, continuing economic liberalization has moved
the country toward a market-based economy. A revival of economic reforms and better
economic policy in 2000s accelerated India's economic growth rate. In recent years,
Indian cities have continued to liberalize business regulations. By 2008, India had
established itself as the world's second-fastest growing major economy. But the year
2009 was not really good for the Indian equity market and the whole economy was also
going into recession
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 4/17
www.capitalheight.com
Phone- (0731)4295950
Economic Prospects for 2010
The year 2009 saw a significant slowdown in India's GDP growth rate to 6.8% as well as
the return of a large projected fiscal deficit of 6.8% of GDP which would be among the
highest in the world. The global economy seems to be recovering after the recent
economic shock. The Indian economy, however, was hit in the latter part of the global
recession and the real economic growth witnessed a sharp fall, followed by lower
exports, lower capital outflow and corporate restructuring. It is expected that the global
economies will continue to sustain in the short-term, as the effect of stimulus programsis yet to bear fruit and tax cuts are working their way through the system in 2010. Due to
the strong position of liquidity in the market, large corporations now have access to
capital in the corporate credit markets.
India's Economic Outlook Projection
Year 2007 2008 2009 2010
GDP Growth 9.40% 7.30% 5.40% 8.00%
CPI 6.40% 9.30% 5.50% 4.90%
In order to sustain economic growth during the time of the worst recession, government
authorities in India have announced the stimulus packages to prop up economic growth.
To finance the stimulus packages, the Indian government has raised over $100 billion
over the last four quarters in a way to finance the stimulus package. The country’s
public debt, according to the RBI, has surged to over 50% of the total GDP and the RBI
has started printing new currency notes.
Central Government Debt
In Rs. Crores Q3 2008 Q3 2009 % of GDP
Public Debt 2,099,286.23 2,505,450.74 50.71%
1. External Debt 237,351.77 294,941.67
2. Internal Debt 1,861,934.46 2,210,509.07
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 5/17
www.capitalheight.com
Phone- (0731)4295950
India is a fascinating country from an economic standpoint because it is so diverse. In
India, you see many of the more traditional industries such as village farming, fishing,
and handicrafts that are blended with modern sectors such as telecommunications,
transportation, and tourism. Today, nearly 50% of the people work in the agriculture,
fisheries, and farming sectors and with the Progressive Alliance or UPA, India’s
government has been able to boost the rural economy by developing basic facilities and
infrastructure. With this, the quality of life for the poor people living and working in rural
areas has improved significantly.
Some of the other areas that have changed to improve India’s economy includes the
government reducing controls on foreign imports and exports, loosening controls for
investments, and allowing higher limits for Foreign Direct Investment in a few of the
primary sectors. While this country has experienced growth and economic
improvements, fast tariff growth in some of the more sensitive sectors to include
agriculture, fisheries, and farming could cause challenges for foreign access to the
country’s huge and expanding market.
However, the service sector is greatly expanding and has started to assume an
increasingly important role. The fact that the Indian speaking population in India is
growing by the day means that India has become a hub of outsourcing activities for
some of the major economies of the world including the United Kingdom and the United
States. Outsourcing to India has been primarily in the areas of technical support and
customer services.
Other areas where India is expected to make progress include manufacturing,
construction of ships, aviation, pharmaceuticals, biotechnology, tourism,
nanotechnology, telecommunications and retailing. Growth rates in these sectors are
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 6/17
expected to increase dramati
we have to see tremendous g
GDP Growth in
The Gross Domestic Product
in the last reported quarter.
Growth was 8.37 percent rea
2006 and a record low of 5.5
encompasses traditional villa
of modern industries, and a
economic growth, accounting
of its labor force. The econo
the decade since 1997, reduc
India GDP Growth Rate Char
cally. Also we must not forget the infrastru
rowth in the coming years in this particular
India
(GDP) in India expanded at an annual rate
From 2004 until 2010, India's average
ching an historical high of 10.10 percent i
0 percent in December of 2004. India's di
e farming, modern agriculture, handicraft
multitude of services. Services are the
for more than half of India's output with les
y has posted an average growth rate of
ing poverty by about 10 percentage points.
and Historical Data:
www.capitalheight.com
Phone- (0731)4295950
cture sector as
sector.
of 8.80 percent
quarterly GDP
September of
verse economy
, a wide range
ajor source of
s than one third
ore than 7% in
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 7/17
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 8/17
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 9/17
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 10/17
www.capitalheight.com
Phone- (0731)4295950
Top Ten Acquisition made by Indian Companies
ACQUIRER TARGET COMPANYCOUNTRY
TARGETED
DEAL VALUE
($ ML)INDUSTRY
Tata Steel Corus Group UK 12,200 Steel
Hindalco Novelis Canada 5,982 Steel
Ranbaxy Daiichi Sankyo Japan 4,500 Pharmaceutical
ONGC Imperial Energy UK 2,800 Oil and Gas
Tata Motors Jaguar & Land Rover Ford Motor 2,300 Automobile
Sterlite Asarco USA 1,800 Mining
Suzlon Repower Germany 1,700 Energy
Videocon Daewoo Korea 729 Electronics
Dr. Reddy Betapharm Germany 597 Pharmaceutical
Suzlon Hansen Group Belgium 565 Energy
HPCL Kenya Petroleum Kenya 500 Oil and Gas
Ranbaxy
LabsTerapia SA Romania 324 Pharmaceutical
Tata Steel Natsteel Singapore 293 Steel
Videocon Thomson SA France 290 Electronics
VSNL Teleglobe Canada 239 Telecom
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 11/17
www.capitalheight.com
Phone- (0731)4295950
The above data evidently shows that Indian companies have grown really quick and
provides sufficient opportunity to the FIIs and FDIs to invest their money in the Indian
companies which has resulted in the rapid growth of our economy.
FII Investment in India
One of the factors responsible for the tremendous growth of the Indian economy has
been its booming foreign trade. Through or previous report we have tried to establish
the fact that the FIIs are reportedly increasing their investment in Indian equity market.
The investment by the FIIs has helped boost the growth of our Indian companies by
providing them the capital they require for carrying out their long term projects. The
investment by our companies, in their respective sectors has helped in the progress of
our Indian economy.
FDI Investment in India
Improving global sentiment and a growing conducive environment in India are
increasingly facilitating foreign investors’ role in the country currently. Several other
factors being attributed to the revival in FDI in the country include liberal investment
policies and reforms, innovative and technologically advanced products being
manufactured in India and low cost and effective solutions.
India has been ranked at the third place in global foreign direct investments, following
the economic meltdown, and will continue to remain among the top five attractive
destinations for international investors during the next two years, according to UNCTAD.
The Indian retail market, which is the fifth largest retail destination globally, has been
ranked the most attractive emerging market for investment in the retail sector by A T
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 12/17
www.capitalheight.com
Phone- (0731)4295950
Kearney's annual Global Retail Development Index (GRDI), in 2009. A recent Ernst &
Young study predicts Mumbai and Bangalore to be the next global centers of
investment along with Shanghai.
The Rural India Growth Story
The Indian growth story is spreading to the rural and semi-urban areas as well. The next
phase of growth is expected to come from rural markets with rural India accounting for
almost half of the domestic retail market, valued over US$ 300 billion. Rural India is set
to witness an economic boom, with per capita income having grown by 50 per cent over
the last 10 years, mainly on account of rising commodity prices and improved
productivity. Development of basic infrastructure, generation of employment guarantee
schemes, better information services and access to funding are also bringing prosperity
to rural households.
Advantages to India
According to the World Fact Book, India is among the world's youngest nations with
a median age of 25 years as compared to 43 in Japan and 36 in USA. Of the
BRIC—Brazil, Russia, India and China—countries, India is projected to stay the
youngest with its working-age population estimated to rise to 70 per cent of the total
demographic by 2030, the largest in the world. India will see 70 million new entrants
to its workforce over the next 5 years.
India has the second largest area of arable land in the world, making it one of theworld's largest food producers. Over 200 million tonnes of food grains are produced
annually. India is the world's largest producer of milk (100 million tonnes per annum),
sugarcane (315 million tonnes per annum) and tea (930 million kg per annum) and
the second largest producer of rice, fruit and vegetables.
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 13/17
www.capitalheight.com
Phone- (0731)4295950
With the largest number of listed companies - 10,000 across 23 stock exchanges,
India has the third largest investor base in the world.
India's healthy banking system with a network of 70,000 branches is among the
largest in the world.
According to a study by the McKinsey Global Institute (MGI), India's consumer
market will be the world's fifth largest (from twelfth) in the world by 2025 and India's
middle class will swell by over ten times from its current size of 50 million to 583
million people by 2025.
India, which recorded production of 22.14 million tonne of steel during April-August
2009, is likely to emerge as the world's third largest steel producer in the current
year.
India continues to be the most preferred destination—among 50 top countries—for
companies looking to offshore their information technology (IT) and back-office
functions, according to global management consultancy, AT Kearney.
The Indian stock markets have risen to be amongst the best performers globally
across the emerging and developed markets in 2009 year-to-date, according to an
analytical study by MSCI indices.India has reclaimed its position as the most attractive destination for global retailers
despite the downturn, according to the Global Retail Development Index (GRDI)
brought out by US-based global management consulting firm, A T Kearney.
Growth potential
According to the CII Ernst & Young report titled 'India 2012: Telecom growth
continues,' India's telecom services industry revenues are projected to reach US$ 54
billion in 2012, up from US$ 31 billion in 2008. The Indian telecom industry
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 14/17
www.capitalheight.com
Phone- (0731)4295950
Registered the highest number of subscriber additions at 15.84 million in March
2009, setting a global record.
A McKinsey report, 'The rise of Indian Consumer Market', estimates that the Indian
consumer market is likely to grow four times by 2025, which is currently valued at
US$ 511 billion.
India ranks among the top 12 producers of manufacturing value added (MVA)—
witnessing an increase of 12.3 per cent in its MVA output in 2005-07 as against 6.9
per cent in 2000-05—according to the United Nations Industrial Development
Organization (UNIDO).In textiles, the country is ranked fourth, while in electrical machinery and apparatus it
is ranked fifth. It holds sixth position in the basic metals category; seventh in
chemicals and chemical products; 10th in leather, leather products, refined
petroleum products and nuclear fuel; twelfth in machinery and equipment and motor
vehicles.
In a development slated to enhance India's macroeconomic health as well as energy
security, Reliance Industries (RIL) has commenced natural gas production from its
D-6 block in the Krishna-Godavari (KG) basin.
India has a market value of US$ 270.98 billion in low-carbon and environmental
goods & services (LCEGS). With a 6 per cent share of the US$ 4.32 trillion global
market, the country is tied with Japan at the third position.
PE players are planning to raise funds for the infrastructure sector. Presently,
around US$ 1.42 billion is being raised by India-dedicated infrastructure funds,
according to data released by Preqin, a global firm that tracks PE and alternative
assets.
Infrastructure, including roads, power, highways, airports, ports and railways, has
emerged as an asset class with long-term growth that can provide relatively stable
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 15/17
www.capitalheight.com
Phone- (0731)4295950
returns, said an Assocham-Ernst & Young survey on Private Equity in Indian
Infrastructure: Strengthening the Nexus.
With the availability of the 3G spectrum, about 275 million Indian subscribers will use
3G-enabled services, and the number of 3G-enabled handsets will reach close to
395 million by 2013-end.
India & China: A Comparison
Ten years ago, it was unthinkable to compare China with India. The emergence of India
and China as major global players heralds new realities. Both countries have
transformed the global political architecture increasingly shifting power from West to the
East. The question issue here is the nature of the India’s economic growth and its
potentials to outperform China.
According to Economist Intelligence Unit (EIU), India is the second largest growing
economy after China. But EIU forecasts that India will surpass China as the fastedgrowing major economy by 2018. And as against the estimation of the Indian
government which has projected the Indian economy to grow by 7.2 percent this fiscal,
EIU has estimated the growth to be 7.7 percent. The growth for the next five years is
estimated to be on the average of eight percent as against the 9 percent in the year
2011-2012.
Two years ago the view that India might have a more competitive economy than China
was met with incredulity. To-day comparison of the two countries offers valuable
insights for the global economy. A fundamental distinction is that China’s growth stems
from resource accumulation while India’s is rooted in increasing efficiency.
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 16/17
www.capitalheight.com
Phone- (0731)4295950
China’s economic superpower ambition has flaws, including graft and waste. India, in
contrast, enjoys many hidden, long-term advantages. Although India’s literacy rate ismuch lower than China’s, its technical and management institutes are far better than
such schools in China. It is estimated that that only 10 per cent of Chinese engineers
have the skills required to work in a global company, while the comparable number for
India is 25 per cent.
A comparison with BRIC & Other Major Economies
CountryGDP
Bn US$GDP
GrowthInterest
RateInflation Unemployment
CurrentAccount
China 4909 10.30% 5.31% 3.50% 4.20% 70500.00
India 1296 8.80% 5.00% 11.25% 8.00% -13.00
Russia 1231 5.20% 7.75% 6.10% 6.80% 33318.00
USA 14256 1.70% 0.25% 1.10% 9.60% -123.00
UK 2175 1.20% 0.50% 3.10% 7.80% -10.00
Brazil 1572 1.20% 10.75% 4.49% 6.70% -3000.00
Europe 12456 1.00% 1.00% 1.60% 10.00% -25.00
Japan 5068 0.37% 0.10% -0.90% 5.20% 1047.00
This table clearly shows that India is the Second fastest budding economy in terms
of GDP growth rate. India’s interest rates are lowest among the BRIC countries
making it easier for the people to borrow money in India. The money borrowed
eventually gets invested and thus help in boosting the Indian economy.
Unemployment rate in India is less than United States as well as Europe and is
giving close competition to United Kingdom.
8/8/2019 Indian Economy Outperforming Other Major Economies - A Perspective by CapitalHeight
http://slidepdf.com/reader/full/indian-economy-outperforming-other-major-economies-a-perspective-by-capitalheight 17/17
www.capitalheight.com
Phone- (0731)4295950
Disclaimer
The information and views in this report, our website & all the service we provide are believed to be reliable, but we do not
accept any responsibility (or liability) for errors of fact or opinion. Users have the right to choose the product/s that suits
them the most.
Sincere efforts have been made to present the right investment perspective. The information contained herein is based on
analysis and up on sources that we consider reliable.
This material is for personal information and based upon it & takes no responsibility
The information given herein should be treated as only factor, while making investment decision. The report does notprovide individually tailor-made investment advice. Capitalheight recommends that investors independently evaluate
particular investments and strategies, and encourages investors to seek the advice of a financial adviser. Capitalheight shall
not be responsible for any transaction conducted based on the information given in this report, which is in violation of rules
and regulations of NSE and BSE.
The share price projections shown are not necessarily indicative of future price performance. The information herein,
together with all estimates and forecasts, can change without notice. Analyst or any person related to Capitalheight might be
holding positions in the stocks recommended. It is understood that anyone who is browsing through the site has done so at
his free will and does not read any views expressed as a recommendation for which either the site or its owners or
anyone can be held responsible for . Any surfing and reading of the information is the acceptance of this disclaimer.
All Rights Reserved.
Investment in Commodity and equity market has its own risks.
We, however, do not vouch for the accuracy or the completeness thereof. we are not responsible for any loss incurred
whatsoever for any financial profits or loss which may arise from the recommendations above. Capital height does not
purport to be an invitation or an offer to buy or sell any financial instrument. Our Clients (Paid Or Unpaid), Any third party or
anyone else have no rights to forward or share our calls or SMS or Report or Any Information Provided by us to/with anyone
which is received directly or indirectly by them. If found so then Serious Legal Actions can be taken