INDIA’s FUTURE 17 March 2007 Kelkar Alumni Lecture IIT Kanur
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 1/62
INDIA’s
FUTURE
17 March 2007Kelkar Alumni Lecture
IIT Kanur
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 2/62
E!en th"u#h the $"rl% has &ust
%isc"!ere% it' the In%ia #r"$th
st"r( is n"t ne$) It has *een#"in# "n +"r 2, (ears "l%
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 3/62
-hat is the In%ia st"r(.
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 4/62
1/ Risin# D #r"$th
a!era#e annual D #r"$th
1300 4 13,0 1)013,0 4 1350 6),
1350 4 2002 )0
2002 4 200 5)0
8"urces9 1300:13309 An#us Ma%%is"n ;133,/' Monitoring the World Economy, 1330:20009<ensus "+ In%ia ;2001/' 2000:200, Finance Ministr(
In%ia 8t"r(
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 5/62
2/ "ulati"n #r"$th is sl"$in#
a!era#e annual #r"$th
1301 4 13,0 1)0 13,1 4 1350 2)2
1351 4 1330 2)1
1331 4 2000 1)5
2001 4 2010 1),
8"urces9 1300:13309 An#us Ma%%is"n ;133,/' Monitoring the World Economy, 1330:20009<ensus "+ In%ia ;2001/
In%ia 8t"r(
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 6/62
13,0 17
1330 ,2
2000 ,
2010 ;r"&/ 50
8"urce9 <ensus "+ In%ia ;2001/
6) Literac( is risin#In%ia 8t"r(
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 7/62
Milli"n
e"le
1350 5 ,
2000 22 220
2010 ;r"&/ 62 65
=) Mi%%le class is e>l"%in#In%ia 8t"r(
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 8/62
1350 =
2000 2
2010 ;r"&/ 1
1 "+ the e"le ha!e *een cr"ssin# "!ert( line
each (ear +"r 20 (ears) E?uals @ 200 milli"n)
,) "!ert( is %eclinin#In%ia 8t"r(
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 9/62
) r"%ucti!it( is risin# In%ia 8t"r(
60 t" =0 "+ D #r"$th is %ue t"
risin# r"%ucti!it(
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 10/62
;U8 /
1350 1175
2000 60,1
8"urce9 -"rl% Bank
7) er caita inc"me #ains
In%ia 8t"r(
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 11/62
5) In%ia is n"$ the =th lar#est
ec"n"m(
In%ia 8t"r(
An% it $ill cr"ss Caan *et$een 2012
an% 201= t" *ec"me the 6r% lar#est
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 12/62
TE INDIA MDEL I8UNIUE
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 13/62
DRIGER8 F R-T
In%ia East an% 8)E) Asia
D"mestic E>"rts
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 14/62
DRIGER8 F R-T
In%ia East an% 8)E) Asia
D"mestic E>"rts
8er!ices Manu+acturin#
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 15/62
DRIGER8 F R-T
In%ia East an% 8)E) Asia
D"mestic E>"rts
8er!ices Manu+acturin#
<"nsumti"n In!estment
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 16/62
DRIGER8 F R-T
In%ia East an% 8)E) Asia
D"mestic E>"rts
8er!ices Manu+acturin#
<"nsumti"n In!estment
i#h tech' caital L"$ tech' la*"ur
intensi!e in%ustr( intensi!ein%ustr(
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 17/62
IMLI<ATIN8 F INDIA MDEL
D"mestic le%
H Insulati"n +r"m #l"*al %"$nturns
H Less !"latilit(
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 18/62
IMLI<ATIN F INDIA MDEL
8er!ices le%
H a!e $e skie% the in%ustrialre!"luti"n.
H "$ %" $e take e"le +r"m +armst" cities.
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 19/62
IMLI<ATIN F INDIA MDEL
<"nsumti"n le%
H e"le +rien%l(9 <"nsumti"n as "+ D
In%ia =
Eur"e ,5 <hina =2
H Less ine?ualit( 4 INI INDE
In%ia 66
U)8 =1
<hina =, BraJil ,3
H The $"rl% nee%s an"ther *i# c"nsumin# ec"n"m( a+ter the U)8)
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 20/62
Reas"ns +"r 8uccess
In%ia’s success is market le%
$hereas <hina’s is state in%uce%)The entrereneur is at centre "+
the In%ian m"%el
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 21/62
Rise "+ #l"*all( c"metiti!e
In%ian c"manies9
Reliance' Cet Air$a(s' In+"s(s' -ir"'
Ran*a>(' Bharat F"r#e' Tata M"t"rs' T<8' Bharati' I<I<I an% DF< Banks
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 23/62
In%ia has a !i*rant ri!ate sace
100 In%ian <"manies ha!e market
ca "+ U8 1 *illi"n 1000 In%ian <"manies ha!e
recei!e% +"rei#n instituti"nalin!estment
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 25/62
In%ia has a !i*rant ri!ate sace
100 In%ian <"manies ha!e market
ca "+ U8 1 *illi"n
1000 In%ian <"manies ha!e
recei!e% +"rei#n instituti"nal
in!estment
12, F"rtune ,00 c"manies ha!e
RD *ases in In%ia
630 F"rtune ,00 c"manies ha!e
"uts"urce% s"+t$are %e!el"ment t" In%ia)
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 26/62
In%ia has a !i*rant ri!ate sace
100 In%ian <"manies ha!e market ca "+ U8 1 *illi"n
1000 In%ian <"manies ha!e
recei!e% +"rei#n instituti"nalin!estment
12, F"rtune ,00 c"manies ha!e
RD *ases in In%ia
630 F"rtune ,00 c"manies ha!e
"uts"urce% s"+t$are %e!el"ment t" In%ia)
2 *a% l"ans in In%ian *anks ;!s @ 20 in <hina/
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 27/62
In%ia has a !i*rant ri!ate sace
100 In%ian <"manies ha!e market
ca "+ U8 1 *illi"n
1000 In%ian <"manies ha!e
recei!e% +"rei#n instituti"nal
in!estment 12, F"rtune ,00 c"manies ha!e
RD *ases in In%ia
630 F"rtune ,00 c"manies ha!e
"uts"urce% s"+t$are %e!el"ment t" In%ia)
2 *a% l"ans in In%ian *anks ;!s @ 20 in <hina/
50 cre%it #"es t" ri!ate sect"r ;!s@10 in
<hina/
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 28/62
But u*lic sace is a r"*lem
Alth"u#h $e ha!e a9
D(namic %em"crac( $ith
h"nest electi"ns
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 29/62
u*lic sace is a r"*lem
Alth"u#h $e ha!e a9
D(namic %em"crac( Free' li!el( me%ia an% ress
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 31/62
u*lic sace is a r"*lem
D(namic %em"crac(
Free' li!el( me%ia an% ress
: ""r #"!ernance
: i#h "ulist su*si%ies' $hichresults in a hi#h +iscal %e+icit
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 32/62
u*lic sace is a r"*lem
D(namic %em"crac(
Free' li!el( me%ia an% ress : ""r #"!ernance
: i#h su*si%ies i#h +iscal %e+icit : N" m"ne( +"r in+rastructure
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 33/62
u*lic sace is a r"*lem
D(namic %em"crac(
Free' li!el( me%ia an% ress
: ""r #"!ernance
: i#h su*si%ies i#h +iscal %e+icit
: <reak( in+rastructure
: Ine++icient #"!ernment c"manies
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 34/62
Earlier $e ha% $"rl% class
instituti"ns' *ut the( are n"$ +ailin#
H Bureaucrac(
H Cu%iciar(H "lice
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 35/62
<"ntrast *et$een u*lic an% ri!atesace raises the ?uesti"n 9
Is In%ia risin# %esite the state .
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 36/62
Ec"n"m( #r"$s at ni#ht $hen
#"!ernment is aslee
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 38/62
-hat e>lains In%ia’s ec"n"mic
success.
1/ E!en sl"$ re+"rms a%% u: state #ettin# "ut "+ the $a(
: e!er( #"!ernment has re+"rme%
since 1331
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 39/62
Key Reforms
H ene% ec"n"m( t" tra%e an% in!estment
H Dismantle% c"ntr"ls
H L"$ere% tari++s
H Dr"e% ta> rates
H Br"ke u*lic sect"r m"n""lies
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 40/62
-hat e>lains In%ia’s ec"n"mic
success.
1/ E!en sl"$ re+"rms a%% u:state
#ettin# "ut "+ the $a(
2/ O"un# min%s are li*erate%
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 41/62
Mental Re!"luti"n
: PI $ant t" *e Bil#a(’: Ra&u’s secret "+ success
: Banianisati"n "+ s"ciet( : 100 ca*le channels +"r 6
: in#lish
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 42/62
-hat e>lains In%ia’s ec"n"mic
success.
1/ E!en sl"$ re+"rms a%% u:state
#ettin# "ut "+ the $a(
2/ O"un# min%s are li*erate%
6/ In%ia has +"un% its c"metiti!e
a%!anta#e in the kn"$le%#e ec"n"m(
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 43/62
Looking Forward
H 7 : 5 ec"n"mic #r"$th
H Dem"crac( $ill n"t ermit m"re than 5
H 1), "ulati"n #r"$th
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 44/62
;/
2000 2100
200, 60,0
2020 ,500
20=0 1'500
20 67'000
This means a er caita inc"me
r"u#hl( "+ ;"n a *asis/9
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 45/62
<"n!er#ence in the 21st centur(
H -h( c"n!er#ence is intuiti!e
H <"n!er#ence %i%n’t haen in the 20 th
centur( *ecause the $"rl% $as cl"se%
H Returnin# t" a $"rl% "+ e?ualit( ri"r t"
17,0
H -hen <hina an% In%ia acc"unte% +"r =,"+ $"rl% D
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 46/62
-h( $ill #r"$th c"ntinue.
Dem"#rahic %i!i%en%
D hi t d i t t h i i i t f t
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 47/62
Demographic trend points to sharp increases in input factors
54%
46%
2,
(rs
0:2,
(rs
Demographic Split
4!
"!!
!
!!
4!!
6!!
"!!
#$!!!
#$!!
#$4!!#$6!!
!!5 !5
#%5 &n
#%# &n
La*"rF"rce
La&or Force will dou&le in the ne't ! years
D hi t d i t t h i i i t f t
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 48/62
Demographic trend points to sharp increases in input factors(ge Dependency
)%
45%*5! %
6%
!%
!%
4!%
6!%
"!%
#+"!,s !! !5 -hina !!
#)%
4%
.5/%
4%
!%
#!%
!%
.!%
4!%
5!%
#+"!,s !! !5 -hina !!
Sa0ings Rate
1igher sa0ings and in0estment rate will translate into higher 2D3 growth
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 49/62
In%ia’s %em"#rahic a%!anta#emeans that its hi#h #r"$th $ill
c"ntinue l"n#er term $hile <hina$ill sl"$
INDIA -ILL RADUALLO TURN
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 50/62
1350 5
2000 22
2010 62 2020 ,0 -est "+ the
Kanur:<hennai line 20=0 ,0 East "+ the
Kanur:<hennai line
INDIA -ILL RADUALLO TURN
MIDDLE <LA88
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 52/62
-hat c"ul% st" the sh"$.
H Fiscal %e+icit
H In+rastructure
H Ba% #"!ernance
H Nuclear $ar
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 54/62
REFRM 8<L
La*"urA#riculture
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 55/62
8ec"n% reen Re!"luti"n
H techn"l"#icall( le%' *ase% "n
M see%sH la*"r intensi!e
H nee%s re+"rms
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 56/62
REFRM 8<L
La*"ur
A#riculture
"$er
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 58/62
REFRM 8<L
La*"r
A#riculture "$er
Re% tae "!ernance
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 59/62
<"r"rate "!ernance
: i#h in In%ia : L"$ in <hina
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 60/62
4ottom Line
H In%ian r"serit( is "n aut" il"t
H <an’t %" $ith"ut #"!ernment) But #"!ernancere+"rm $ill take time' till mi%%le class is
%"minant)
H uman caital $ill c"ntinue t" +l"$er *ase% "n
ri!ate initiati!e' an% %ri!e the nati"n
In%ia has la$ <hina has "r%er
8/12/2019 24 Kel Kar Lecture
http://slidepdf.com/reader/full/24-kel-kar-lecture 61/62
In%ia has la$' <hina has "r%er
:In%ia #"t %em"crac( *e+"recaitalism an% this has ma%e all the
%i++erence
:It $ill *e sl"$er than <hina *ut its
ath $ill *e surer
:In%ia m"re likel( t" reser!e its$a( "+ li+e