By J Mulraj
It is not difficult but rather impossible to find any positive cues about the Indian economy these days. Pick up any business daily and statistics about how swiftly the economic variables are deteriorating stare at you. Add to that shocking revelation of graft in the political and corporate world. Most of us have already given up hope on the recovery of US or Europe. But that China too is steadily losing its resilience to global slowdown is a painful fact.
In the midst of this a Boston Consulting Group report comes as a breath of fresh air. It emphasizes on the fact that 6.5% GDP growth rate for India is not bad. Especially because the number though far from double digits is sustainable for next few decades. We completely agree that consistent 6.5% GDP growth rate for few decades is commendable by any yardstick. And if that were to come true, India undoubtedly is the place to be for long term investors.
The BCG report bases its conclusion on the fortune of Indian economy on its consumption pattern. That the consumption story is a pillar of strength for the Indian economy is common knowledge. What gives it weight is the fact that most of the consumption is without leverage. As also the fact that household consumption is growing without any compromise in savings rate. In fact BCG expects even the Chinese Economy to steer its wheel towards consumption growth going forward. That is after having focused on big ticket government investments over the past decade.
But will consumers in China and India help their respective economies easily tide over a global slowdown? Well, BCG expects them to spend a combined total of US$ 64 trillion on goods and services in the decade leading up to 2020. No doubt that itself could stoke a healthy growth rate in both the Asian economies. But disproportionate growth rates across geographies and social classes are a big worry. One that could paralyse the consumption story in both the economies. Recent instances of labour unrest in China and India point in this direction.
It is not difficult but rather impossible to find any positive cues about the Indian economy these days. Pick up any business daily and statistics about how swiftly the economic variables are deteriorating stare at you. Add to that shocking revelation of graft in the political and corporate world. Most of us have already given up hope on the recovery of US or Europe. But that China too is steadily losing its resilience to global slowdown is a painful fact.
In the midst of this a Boston Consulting Group report comes as a breath of fresh air. It emphasizes on the fact that 6.5% GDP growth rate for India is not bad. Especially because the number though far from double digits is sustainable for next few decades. We completely agree that consistent 6.5% GDP growth rate for few decades is commendable by any yardstick. And if that were to come true, India undoubtedly is the place to be for long term investors.
The BCG report bases its conclusion on the fortune of Indian economy on its consumption pattern. That the consumption story is a pillar of strength for the Indian economy is common knowledge. What gives it weight is the fact that most of the consumption is without leverage. As also the fact that household consumption is growing without any compromise in savings rate. In fact BCG expects even the Chinese Economy to steer its wheel towards consumption growth going forward. That is after having focused on big ticket government investments over the past decade.
But will consumers in China and India help their respective economies easily tide over a global slowdown? Well, BCG expects them to spend a combined total of US$ 64 trillion on goods and services in the decade leading up to 2020. No doubt that itself could stoke a healthy growth rate in both the Asian economies. But disproportionate growth rates across geographies and social classes are a big worry. One that could paralyse the consumption story in both the economies. Recent instances of labour unrest in China and India point in this direction.
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