An interesting report by @UBS on 'Is India the new China?'. A thread on some of the important points...
India needs to be understood on its own terms. It is the only country with the scale to match China, but it will not be the next China. China’s economy would have to crash and India’s grow at over 10% a year for several decades for India to catch up. Neither is likely.
India is expected to overtake China's population by 2027. By 2030, nearly 1/5th of the world's working age population (15-64 years) will be Indian. India's median age of 28, which is 10 years below that of China, will be a key advantage in terms of supply of labour.
An average of 10 million people will enter the working-age population each year until 2030, translating to around 1% annual growth for India’s current working age population of about 920mn. China’s working-age population peaked in 2015 and is on track to decline by 27mn by 2030.
At around 30%, India’s investment-to-GDP ratio is high by global standards. But to consistently realise a potential growth rate of 6% in real terms, it needs to rise to 33%. Private sector is likely to remain the main source of investment, followed by households & public sector.
What really sets India apart from other non-China competitors as a manufacturing base is its large, fast-growing domestic market that can absorb large share of a company's output. India will account for 17% of global middle-class consumption in 10 yrs, one notch below China's 22%
Despite having essential resources like land, low cost labour & coal, India missed out on developing strong manufacturing setup. Lack of a strong manufacturing base has limited India’s growth potential. At 1.7%, India’s export share in world exports is a fraction of China’s 13.2%
Deficient infrastructure is one of the bigger hurdles in the way of productivity, & is a significant hindrance to #MakeInIndia. Plugging the gaps in infra, mainly in power, transport, logistics sectors, would help kickstart higher investments, growth & employment generation.
India’s local currency bond market is dominated by government securities. The corporate bond market, at around $405bn (or 14% of GDP), is relatively small compared to more developed markets like China (31%).
Around 25% of Nifty's market cap is reliant on global developments. Further, 40% of corporate India’s sales originate outside of the country, compared to 14% in China.
