Via Times of India, India a superpower by 2030: poll
India will be a superpower in the next 25 years and Bollywood may one day surpass Hollywood as the capital of the world entertainment industry. This might seem like a pipe dream, but these are the answers thrown up by a Times-CNN poll conducted in four metros.
The poll, conducted by market research firm TNS, was done in Delhi, Mumbai, Kolkata and Chennai. Seventy-five per cent of the respondents feel India could be the next superpower.
Also, with India's GDP rivaling that of China, its firm commitment to democracy and a rapidly-growing rich and middle class, India's future superpower status is assured, they feel. Mumbaikars (84 per cent) are more optimistic about the future. Delhi (75 per cent), Chennai (70 per cent) and Kolkata (68 per cent) are not so gung-ho.
To this blogger, this kind of widespread hyper-confidence is a two-edged sword. Confidence is a good thing and propels a society forward but the great expectations this sets up, most likely, will never be realized as anticipated -- this is a sure recipe for despair in the years to come.
In business, we are advised to under-promise but over-deliver. Here, it seems, India's leaders -- politicians, media, business-folk, academia, celebrities -- have all thrown caution to the winds and have (literally) promised the moon to our young. Maybe these promises will come true. But, chances are, that it'll be impossible to do enough consistent with the euphoric state India is in now.
Great depressions follow when euphoria's bubble bursts and reality sets in. Risk aversion becomes the norm and, absent hope about the future, consumption and investment plummet.
In capital markets, we are advised to be very suspicious of ideas that everyone has come to believe in. At least, betting along with such ideas is a fools game since the best possible future scenario is priced into assets. When this happens, one must take profits and run. For instance early 2000 -- when everyone was convinced the internet is the future master of the universe -- was the best time to take profits in cyber-equities.
This poll is very sobering to us. We think this implies India has peaked -- its stock market, its property market, its consumer market all are likely at bubble highs. Every market touched by the urban young has likely already priced in the absolute best case scenario.
Watch out everybody. Sheer precipice ahead.
Sunday, October 02, 2005
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7 comments:
PR,
Got to agree you on this.
India, especially it's middle class is currently on ecstacy.
When this "irration exuberance" hits a roadblock there is going to be much heartache, that however is not my biggest concern.What I fear is,as soon as a fall occurs, our enlightened leftist will use it to tar free market, globalisation and grap power by making promises of utopia.
Considering that Indians as such don't have a dispassionate view of history, we are going to take it hook, line and sinker
PR, DG,
I cannot agree. While a measure of caution is in order, I'm not sure this parade deserves all the rain you've rained on it.
Specifically, comparing BSE and NSE euphoria to the internet bubble may not be an apt comparison. Here's why:
- the stock market in Bombay is reasonably rational - there's decent fundamentals for it's growth - frothy maybe, bubble unlikely.
- the stock market in India affects a tiny percentage of the population compared to NASDAQ and NYSE.
- India's demographics are any country's dream right now - the labor force is not about to drop off a sheer precipice (like Japan and China). So the predicated growth is based on solid demographic grounds, not wild speculation.
Barring a disastrous war with bad-boy Pak, India will sustain 5% growth over the next 45-50 years. That's enough to be dominant. Doesn't guarantee that the people will be happier in general (though I can easily see that happening), but it will guarantee India being a superpower, which is what the poll set out to measure.
Libertarian,
May be during the course of present decade some other third world country will blaze the trail and overtake us.It may be some African Trade Bloc or East Asian one for all we know
I find this talk of "5% growth and we will be there" complacent.
What I meant (and I think PR will agree it.), that we have to think seriously about competition ahead , which we don't seem to be thinking
Careful libertarian. There's a big difference between growing at 5% and at 8% -- the delta compounds very significantly over decades.
At 5%, we ain't even going to be close to becoming a superpower. Besides, if given the demographic advantages, if 5% is all we can muster, we are in for a world of hurt.
In any event, the point was not that real growth will not happen -- much like it was never a question that internet will be a real force -- rather the issues is whether such growth will be enough to match our great expecations which are exactly what asset prices imply.
We hope you are right, of course, but fear we are.
Best regards.
PR, DG, fair enough. 5% is certainly not the same as 8%. However, if you scan the BRICs paper, it predicts a sustained 6.5% for India over 50 years. Take a look at how China is expected to slow down to under 5% (and decelerating) in 15-20 years.
If India can do it in 2 stages - 8% for 20 years (4.66x) and 5% for 30 years (4.32x) you get ~20x growth in 50 years (presume this is inflation-adjusted growth). Not unattainable given India's size and the approaching demographic bulge. More importantly, India can do this while the other biggies (not including the US and China) viz. Japan, Germany, UK, France, Italy will be crawling along at 1-2% (if they're lucky). Further, all the current biggies (US excluded) got to their size in a "growth spurt" spanning 10-20 years. I expect India to be on the high end of that given its size - hence the 20 year 8% assumption. This baby's got a long way to grow.
The "irrational exuberance" of the Indian markets is not as irrational as it might seem at first glance.
DG, sorry - should have included this in the previous post. If we can execute at or close to what I've noted above, the only country that can stop India will be India itself. The competition is irrelevant - there's no country (barring China) with a 10-figure population and the systems in place to channel that force.
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