Envisioning India 2030 India 2030
Mar 16, 2016
Envisioning
India 2030India 2030
THE HORIZONS WE COVER
• Demographic
• Infrastructure &
technologytechnology
• Economic policies
DEMOGRAPHIC1.2 billion and counting..
World Population
India’s population-
1.21 Bn
China’s population-China’s population-
1.35 Bn
THE FUTURE
• India most educated country in the world by 2030
• In 2020,average Indian age-29 yrs
China & US-37 yrs
West Europe- 45 yrs
Japan-48 yrs.
THE GREAT INDIAN MIDDLE CLASSMIDDLE CLASS
5-10% to 90% of population by 2039
India’s Middle Class Consumption
INDIA & CHINA
a comparison..a comparison..
India’s working age population
Working age
population
• China in just 15 years, between 1995 and 2010,
leveraged its “demographic dividend” to build the
world’s second-largest economy after the U.S.
• Both countries have momentum but China’s
structural factors are far superior to India’s so India
will probably not get the same leverage.
Demographic Transitions
MAJOR CHALLENGES
•Literacy
•Urbanization•Urbanization
•Food requirements
•Inequality
LiteracyLiteracy
The Indian literacy rate grew to 74.04% in 2011 from
12% at the end of British rule in 1947.
• World average literacy rate – 84%
• Sluggish growth in the literacy rate
• According to a 1990 report, India will achieve 100%
literacy by 2060
Public spending on education
Public spending on education – currently at 3% of
GDP, versus the 4.5% average for middle-income
countries – needs to rise to 6%.
• Capacity for an additional 40 million people required
to increase the enrolment rate from 14% to the global
average of 26% in higher education.
• Govt. sponsored national scholarship program.
• Another 1,000 universities & 40,000 new colleges to
double the enrolment in higher education by 2020.
• Need of PPP to educate an additional 166mn people in
the next two decades.
UrbanizationUrbanization
India’s scale of urbanization will be immense.
India will have 68 cities with population more than 1
million.
13 cities with more than 4 million people13 cities with more than 4 million people
and
6 megacities having population more than 10 million
residents !
Food RequirementsFood Requirements
India’s requirement by 2030 - 345 mn tons
Current production - 241 mn tons
Deficit - 104 tons
• Poor land management
• Excessive dependence on rain water or ground
water
Problems
water
• Poor supply chain
Declining Food Grain Production
What can be done?
• Improvement in the yield per hectare
• Implementing a better food distribution mechanism
-Development of all weather storage facilities
• Increasing the share of private investment in
agriculture, which is currently only 15% of agriculture
GDP
INEQUALITYINEQUALITY
• India still has 37.2% of its population, living below
the poverty line
• According to Forbes recent list of billionaires, India
is home to the 3rd largest number of billionaires in
the world – 69 in 2010
• Top 10% of wage earners make 12 times more than
bottom 10%, up from a ratio of 6 in the 1990s.
• SCs & STs have gained little from India’s new
prosperity because they have lacked access to prosperity because they have lacked access to
assets, skills and higher education.
• The 5 Bimarou states are home to large proportions
of India’s poor (64%) & socially disadvantaged (40%)
Inequalities across states
• It is believed that the situation can improve with
the rise of middle income group.
• The govt. must step up efforts to strengthen the • The govt. must step up efforts to strengthen the
education & employment industry – especially in
the Bimarou states, where both social inequalities
& the demographic boom are concentrated.
Health Care
Year 2012
US$ 75 Billion
Year 2020
US$ 280 Billion
Year 2030 (ESTIMATED)
US$ 726 Billion
EDUCATION
• National education budget 2011-12 ,52027 crore
i.e. Usd$10.56 billion
• 25% Population Is Still Illiterate
• 15% of Indian students reach High school
•20 CENTRAL UNIVERSITIES
•215 STATE UNIVERSITIES
•100 DEEMED UNIVERSITIES•100 DEEMED UNIVERSITIES
•5 INSTITUTES UNDER STATE ACT
•33 INSTITUTES OF NATIONAL IMPORTANCE
“INDIA WILL BE THE MOST
EDUCATED COUNTRY IN THE
WORLD BY 2030”
-KAPIL SIBAL, MINISTER OF HRD
POPULATION IN 2030
Year 2012
0.7% OF GDP
INVESTMENT IN INFRASTRUCTURE
0.7% OF GDP
Year 2030
1.1% OF GDP
• Electricity: US$167 billion
• Railways: US$65 billion
• Road and highways: US$92 billion
• Ports: US$22 billion
• Airports: US$8 billion
POPULATION OF 1 MILLION AND ABOVE
• 35 cities in 2001
• 50 cities in 2011• 50 cities in 2011
• 87 cities by 2030
(Estimated)
INVESTMENT FROM 2012-
2030
Rs 39.2 LAKH CRORE
AIRPORTS
Number of airports in 2011
92 airports
Number of airports in 2030
150 airports
Source: V.P. Agarwal, chairman of airports authority of India
ENERGY SECTOR
Coal
Coal share in total energy sector in 2005
65.5%65.5%
Coal share in total energy sector in 2030
61.2%
NUCLEAR POWER
Power generation in 2005
2.4%2.4%
Power generation in 2030
8.5%
NATURAL GAS
Share of natural gas fired generation
IN 2005-
11.1%11.1%
IN 2030-
13.8%
Source: Mckinsey global report on India's urban awakening
HIGHWAYS AND ROADS
• India’s highway network 0.66 km of
highway per square kilometer of land
• United states highway network 0.65 km of
highway per square kilometer of land
PORTS
• 12 major and 187 minor ports
along 7500 km coastline
• Inland water transportation undeveloped
ELECTRICITY
• 5th largest electricity supplier
• Existing supply 130000 MW
• Demand of electricity in India in 2030
400,000 MW
RAILWAYS
• Indian Railways has 114,500 kilometers
• World's fourth largest railway network
SOURCE: MCKINLEY REPORT
SOURCE: MCKINLEY REPORT
Monetary policy
• A tool used by the central bank to manage money
supply in the economy in order to achieve a
desirable growth.desirable growth.
• It’s a policy regarding cost, supply and availability
of money in the economy.
Reforms since 1990
What has been done till now
• Reduced reserve requirements.
• Changed interest rate structure.
• Increased micro finance.
• Fiscal monetary separation.
PROJECTED GDP
Source - IMF
Analysis of Projected GDP
• Chinese economy- largest in the world by 2016.
• India 3rd largest economy by 2030.
• Among the ten richest countries, four will be
Asian, three will be American and three will be
European.
COMPARATIVE ANALYSIS
COUNTRIES CURRENT GDP
(In Billion USD)
PROJRCTED GDP
GROWTH
RATE(REAL)
ESTIMATED GDP IN
2030 (In Billion
USD)
CHINA 10050 11% 83778
US 14256 4.40% 33785
INDIA 4001 9.80% 25942
JAPAN 4308 3.30% 8266
RUSSIA 2218 5.80% 6878
SOURCE - IMF
Monetary policy and India’s futurefuture
What should be done
Capital Account Convertibility
Is the freedom to convert local financial assets into
foreign financial assets at market determined exchange
rates.
•India - Current account convertibility.
•Partial capital account convertibility.
CAC;The Good
• Risk diversification.
• Access to new technology.
• Increase in foreign investment.
FDI
To be or not to be..
THE PRESENT
• Hotel and tourism: 100%
• Insurance sector: 26%
• Power : 100%
• Roads, highways, ports and harbours: 100%.
• Drugs and pharmaceuticals: 100% where compulsory licensing is not required.
FDI; DO WE REALLY NEED IT?
• Domestic investment
– New markets
– Demand for inputs
• Technology• Technology
• Export competitiveness.
• Increased competition.
• Employment opportunities
And why we don’t
• Crowds out domestic investors.
• Emissions of effluent.
• Political influence to prevent the imposition of rules.
Capital Account Convertibility;THE BAD
• Destabilize the economy.
• Worsening of the balance of trade.
• Adversely affecting due to world imbalance.
(US DEBT CRISIS)
• Fueling inflationary pressures.(Rising oil prices)
So what’s stopping us?
• Macro-economic Policy Concerns
– Fiscal deficit to be reduced to 3-4% of GDP.
– Inflation to be reduced to 3-5%.
– Foreign exchange reserves sufficient to – Foreign exchange reserves sufficient to
meet six months requirement
• Sound Financial Sector
“RBI is free. I can say that because the government has allowed me to say so”; YV allowed me to say so”; YV
Reddy
Is RBI Really Independent ?
• Management including personnel matters
• Financial aspects• Financial aspects
• Conduct of policy
Sectorial Distribution to GDP
Fiscal policy
Fiscal policy is the means by which a government
adjusts its levels of spending in order to monitor
and influence a nation's economy.and influence a nation's economy.
Drawback of current taxation policy
• Multiple taxation system.
• Dependence of tax structure on very few selected items.
Direct taxes :Corporate and income tax,Direct taxes :Corporate and income tax,
Indirect taxes: Excise duty , custom duty and service tax.
• Less coverage. Less than 1% of population pays income
tax.
• Tax evasion:
• Interstate inequalities
• Sectorial inequality.
Is GST a Solution??
GST
Benefits of GST
• More revenue for Govt.
• Leads to equitable distribution of income.
• More transparency in the system.
• Eliminates duplication of tax on producers at different
stages.
Drawbacks of GST
• Inflation
• Tax revenue short fall
Features:
• Exemption of Income Tax on savings upto INR 3 lac under
section 80(c).
• Slabs for Income Tax:
Income Tax rateIncome
( in INR)
Tax rate
Up to 1.60 lac Nil
1.60 lac – 10 lac 10%
10 lac – 25 lac 20%
25 lac and above 30%
• All perks and allowances will be added to Income of
people for calculating tax.
• Corporate tax reduced from 30% to 25%.• Corporate tax reduced from 30% to 25%.
• Wealth tax limit raised to 50 lakhs from 30 lakhs.
• Encourages long term savings in the economy.
• Will bring down the requirement for FDI in the economy.
• More coverage.
ADVANTAGES OF DTC
• More coverage.
• Less tax evasion.
• Control on black money.
• India topping the list with almost $1500 Billion black
money in Swiss banks.
• Followed by Russia $470 Billion, UK $390 Billion, Ukraine
PARALLEL ECONOMY (BLACK MONEY)
• Followed by Russia $470 Billion, UK $390 Billion, Ukraine
$100 Billion and China with $96 Billion.
• Makes monetary policy ineffective.
• Black money constitutes 40% of GDP.
• India will be able to clear all their foreign debts in 24Hrs.
• Even if all the taxes are abolished, the government can
maintain the country easily for 30 years.
BY BRINGING BLACK MONEY BACK
• NO FDI’s will be required.
• Infrastructure requirements could be easily met.
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