When India finally achieved its hard-won independence in 1947, it was already the sixth biggest economy on the Planet, sporting an (adjusted) annual GDP of $2.7 billion, but this raw headline figure masked a much more brutal truth. Disparities in relative wealth on the Subcontinent (mostly a legacy of the departing Raj) meant the average Indian’s annual wage on independence had actually fallen to barely 18% of the global benchmark. And things were to get worse over the following decades…by 1990 India had slumped to 12th in the global GDP table, with significantly worsening disparities in relative poverty: at that time (1990) the average Indian worker earned just Rs 7,500 a year, or $966 in today’s money.
This, you might think, was a Nation in decline…but if you thought that, you couldn’t be more wrong. Fast forward thirty-five years, and the IMF has just released a report (The World Economic Outlook (www.imf.org)) which confidently predicts India is on course, over the coming year, to overtake Japan and become the fourth largest economy in the World. According to the same IMF Report, within the next three years, the Subcontinent will also move up a notch to third place in the global economic league to displace Germany, with only the United States and China in its sights.
In the meantime, the IMF predicts the Subcontinent will continue to be the fastest growing large economy on the Planet for at least the next two years, growing by between 6.2% and 6.3% across 2025 and 2026. Compare that with the United States, which has a comparable growth projection of 1.8%, and the United Kingdom, which is still slumbering at 1.6%.
So, how did the Subcontinent get here, and is that level of ferocious growth sustainable?
Well, there are five key reasons for India’s current economic success, so the simple answer to the second of those questions is “YES”, and as to the first:
- The Subcontinent is the World’s fourth largest consumer market (www.worldbank.org): fuelling economic expansion exponentially over recent years by reason of a compelling 70% rise in domestic consumption, and driven in turn by the combined resources of the most populous nation on the Planet: increasingly urbanised, richer than ever before and hungrier than ever before to acquire the latest technologies and consumer goods. It’s certainly a very far cry from the days when the Subcontinent’s workers were earning an average of $966 a year.
- Added to which, with each passing year, Prime Minister Modi’s Government is spending and investing more on major infrastructure projects: roads, railways, power stations, and everything in between, to the tune of $128.64 billion last year alone (www.ibef.org). On a rolling basis, that’s more than enough to land a satellite on the moon…which is, incidentally, also a feat achieved by India back in 2023.
- Global India is also now the tenth largest importer and the ninth largest exporter of goods and services on the Planet: constantly feeding off cutting edge technological advances which are rolling white hot out of Mumbai, Pune, Bangalore, Chenai and all points in between…sufficient in themselves to make the Subcontinent the World’s unrivalled technology and trading hub.
- In addition, India also has the World’s second largest domestic labour force: 586 Million workers to be precise, with more and more of them becoming urbanised and hungrier than ever to take part in the Subcontinent’s consumer boom (see point 1 above), whilst at the same time working together to help India meet the demands of a global marketplace.
- And then, of course, there’s a resurgent level of Foreign Direct Investment as well: most recently running at more than $82 billion on an annualised basis, with a particular emphasis on Financial Services, Banking, Insurance and R&D.
Beating a Path to India’s Door
Small wonder then that the World has been beating a path to India’s door; eager to sign up to new Free Trade Agreements: including countries such as South Korea, Japan, Australia, the UAE and now…as of Tuesday this week, having at long last sloughed off the unhappy hubris and nemesis of Boris Johnson… the United Kingdom too (www.gov.uk/government/news).
What’s not to like? Things can only get better…
Red Ribbon Asset Management (www.redribbon.co) was established more than a decade ago to harness the full potential of India’s fast evolving and emerging markets so as to meet the demands of global communities within a circular economy, whilst at the same time fully recognising the compelling demands of planet people and profit.
Invest in Red Ribbon Asset Management
Red Ribbon Asset Management (www.redribbon.co) aims to harness the full potential of fast evolving and emerging technologies to meet the needs of global communities as part of a circular economy, fully recognising the compelling demands of planet people and profit.
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