MEET INDIA

MOHAN GURUSWAMY

Meet India!

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Modern India now has over 2000 ethnic groups. Modern Indian languages have evolved from all the world’s four language families. Indo-European, Dravidian, Austro-Asiatic and Tibeto-Burman. India has 1652 individual mother tongues. The 2001 Census tells us that 30 languages are spoken by over a million each, and 122 by over 10,000 each.

India has almost 1.2 billion people, and the Union of India consists of 32 States and Union Territories. The biggest of these is Uttar Pradesh with a population of 199.6 million or 16.49% of India’s. It is as big as Brazil. The smallest political unit is Lakshadweep which has just 64,000 (0.01%).

Quite clearly the omnibus term India, incidentally derived from the name of a river that hardly flows through it, masks a diversity of nations.

In late 2012 India became the world’s third largest economy in PPP terms and has grown at an average rate of over 7% since 2000.

Clearly it’s a country of great heterogeneity and complexity. Its diversity makes it unsuitable for any other form of government but DEMOCRACY.


Only by Democracy!


Major world economies from 0-2005.

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The Rise and Fall of Nations!


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IMF Projections for China & India PPP GDP’s

Year China India

2020 $29 trillion $13 trillion






China and Japan: Mirror image demographics

Japan has entered the most daunting phase of its demographic transition. Savings rates will likely decline after 2005 and the old-age dependency ratio will surge by 2020. A surge in public debt compounds the problems.

This decade, China’s demographics are at their most favourable for economic growth. By 2020, the population will have aged a bit more, and its dependency ratio would be past its trough. But China’s demographics will still look a lot better than Japan’s.

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Japan 2020,millions of people

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India: Demography to support growth.

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The massive numbers of young people in the population today will reach the working age over the next 15-20 years. By 2020, India will have 270mn people (more than today’s total US population) between the ages of 15 and 35.

Savings rates and productive potential will be at their highest. The challenge for India is to develop a more labour-intensive growth model to take full advantage of the productive potential of these vast masses.


Asia: Boosted by declining dependency ratios ‘till 2020.

Non-Japan Asia will continue to benefit from declining dependency ratios until 2020.

Typically, savings rates rise during periods of declining dependency ratios. (This began to happen in Asia from 1965 onwards). Higher savings will be able to fund higher investment rates, enhancing the productivity of the growing work-force.

Technology (embodied in FDI and through imports) should ensure strong growth and rapid economic catch-up for Asia. India has the demographic advantage in 2020-2050

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Dependency ratio (ratio of population aged 0-14 and 65+ perthousand population 15-64)

China India

Indonesia Republic of Korea


India’s place in the world.


Who is what in India.


1. In 1947 India’s population was 320 million.2. India’s population in 2015 is 1.27 billion.3. In the meantime India has become a very youthful

country. 70% of its people are below the age of 30, of whom about 350 million are below the age of 14.

4. The GDP has grown from Rs.279,618 crores in 1947 to Rs. 5, 741,791 crores in 2014, or by twenty times.

5. In 1980-81 the central budget was Rs.19, 579 crores. The 2015-16 budget is Rs. 17,77,477 crores.

6. The 12th Plan outlay is Rs.35,68,626 crores. The 1st Plan outlay was Rs.627 crores.

Expansion of the State.


On what and whom does the GOI spend?

Between the intention and reality.


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Number of people in the Service of the Nation!


The estimated wage bill of government at all tiers is around

Rs.12.00 lakh crores

or

about 7.5% of the estimated 2015-16 GDP of Rs.160.00 lakh

crores.


• We have 185 lakh public servants at the three tiers of government.

• Only one out of six is with the local government institutions.

• Which simply means we have six persons telling us to do this or do that, for every one supposedly serving us?

• Who are these people answerable to?

Why more Government gives less Governance?

“The interference of the state power in social relations becomes superfluous in one sphere after another, and then ceases of itself.

The government of persons is replaced by the administration of things and the direction of the processes of production.

The state is not “abolished,” it withers away.”


Freidrich Engels in Part 3, Chapter 2, of Anti-Dühring.


Gross Savings/GDP ratio.This is the sum of voluntary and involuntary savings or, if an economist has to describe it, gross national income less total consumption, plus net transfers.

This ratio has fallen from 37% to 34% in the past three years seriously impairing our national ability to invest.

China’s Gross Savings/GDP ratio has remained a steady 53% over the years.

The main business of the government is to collect revenues, mostly in the form of taxes, to spend on the well-being of the people.

India’s Tax/GDP ratio is among the lowest for a major economy.

Together with states' collection, tax revenues of the government account for just about 16% of GDP.

That compares very poorly with the tax-GDP ratios of developed nations. For instance, the tax-GDP ratio for the UK is 34.3%, for Germany 37% and about 24% for the US. China collects a little over 21%. 4/20/16mohan guruswamy 22

The Tax/GDP ratio.

Country Investment as % GDPChina 42.60

India 33.70

South Korea 28.20

France 20.80

Japan 20.20

Russia 20.00

European Union 19.70

Italy 19.20

Germany 18.90

Pakistan 18.10

Brazil 17.00

United Kingdom 15.00

United States 12.50


Some Investment/GDP ratios.


State populations 1991-2051



Share of various taxes.


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Revenue that is officially foregone (2016-17).


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How our wealth is spread.


The Poverty Map of India.


Reality 1. 62% of agricultural land is rainfed. 64.8% of the population is linked to agriculture for livelihood either as cultivators or as agricultural laborers. Rural workforce in 2001 about 250 mn.

Reality 2. In 2015, 260.3 mn or 26.1% below poverty line of 2400 calories per day or Rs. 27 per day.

Reality 3. 83.5% of all households (176.5 mn) below median per capita of Rs.72,000 per annum. Income inequality –Gini increasing.

What are India’s grim realities?

What are India’s grim realities? - 2


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Reality 4. Regional imbalances growing. Reality 5. 34.6% still illiterate.Reality 6. Employment in organized

sector stagnating at around 31 mn for past 5 years. Government employs 19.3 mn or 69%, while PSU’s & Pvt. Sector employs only 10.65 mn.

Reality 7. Government capital expenditure for development now down to less than 15% of budget.

India’s export skyline.


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India’s import skyline.


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India’s severely imbalanced trade.


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The Western Union economy!


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The importance of money order’s.


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The weight of agricultural dependency.


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End of land for India.

India’s groundwater potential.


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The ultimate sustainable irrigation potential of India has been estimated to be 139.5 mha, comprising 58.5 mha from major and medium river-fed irrigation canal schemes, 15 mha from minor irrigation canal schemes, and 66 mha from groundwater well fed irrigation.

India's irrigation now is mostly groundwater well

based. At 39 million hectares (67% of its total irrigation), India has the world's largest groundwater well equipped irrigation system.

India’s growing groundwater dependence.


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Running out of water.


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Groundwater stress of the Indus basin.


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Average farm size.


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Who owns the land?


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Marginalization of Agriculture.


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NPA’s piling up.Credit off take growth for Manufacturing has fallen from 21% to 7.1%. Construction sector off take has slowed down from 27.4% to 4.1%. Mining credit off take has fallen from 17.1% to a negative 8.2%. Only Electricity credit off take has just about held course by dropping from 13.7% to 12.7%. Industries credit off take has also perceptibly slowed down from 9.6% to 5.2%.

How good is our GDP growth?


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India’s GDP since 2006.


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India’s GDP growth trend.


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The PM has been referring to a smart upturn in FDI and mentioned a figure of $42 billion for the year. It might be so. But Global Financial Integrity (GFI), a respected Washington DC based think-tank estimated that last year Indian illicit outflows amounted to $83 billion.

Last year Indian entities also officially invested $18 billion overseas as FDI.

So how and where does this leave us?

FDI Investment – In or Out?


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Pile-up of Injustice.


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Jai Hind.


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Economy & Finance

MEET INDIA