Zooming or Booming Indian Economy
Posted : December 20, 2006 at 9:26 pm [IST]
The major media players as well as financial institutions world over are watching India moving in faster gear in the global competition. While Tata and CSN war over Corus is on, other Indian biggies are fully busy with their own acquisition projects. Even PSUs such BHEL are preparing to go for some big kills. Some of the reports and studies confirming the zooming booming Indian economy are here:
According to the reported assertion from global research firm Credit Suisse, India is set to surpass China as the fastest-growing economy in Asia next year on the back of increasing consumer demand and public investment in infrastructure. In its December forecast, the firm upgraded India’s economic growth rate to 9.5 per cent in 2006 from 8.5 per cent projected in September this year. The economy is predicted to grow by 10 per cent in 2007 and 10.5 per cent rate in 2008.
A report by McKinsey and Indian trade association Nasscom says India’s BPO export revenues will surge 37% by 2010, to touch $25 billion, from the current $7.5 billion. According to Sourabh Kaushal, who leads the ICT Practice at research firm Frost & Sullivan, of the 600 BPO companies in India, 65% are captive and 35% are third-party vendors.
India has progressively improved its ability to compete as measured by the Switzerland-based International Institute of Management’s (IMD) World Competitiveness Yearbook (WCY), jumping from 50th position in 2003 to 29th place in 2006. The ranking analyses the competitiveness of 61 economies on the basis of over 300 criteria dealing with economic performance, government efficiency, business efficiency and infrastructure.
India boasts the world’s largest population of qualified engineers, an impressive availability of IT skills, and one of the youngest demographic profiles. But competitiveness is enhanced with resourceful management of change, anticipating and adapting better and faster than competition. Here, India has a major asset, ranking fifth for its “resilience of the economy to economic cycles”.
In the global ranking, India ranks 29th this year. The WCY also gauges India’s performance within regional and peer group rankings based on population size and GDP per capita. India ranks ninth out of 15 economies in the Asia-Pacific region, 10th out of 30 economies with populations greater than 20 million, and its best ranking: fifth out of 25 economies with GDP per capita less than $10,000.
India gained on three of the four major factors that IMD uses to measure competitiveness. In Economic Performance, India rose an impressive five ranks from 12th to seventh, primarily due to a stronger domestic economy than last year. India’s real GDP growth in 2005 was a booming 8.1% and business confidence was more optimistic than in previous years. We are now starting to see the positive impact of economic reforms undertaken in the past.
The ranking for Government Efficiency progressed from 39th to 35th, with the best performance in Fiscal Policy (12th). India is in above average position for Business Efficiency, increasing from 23rd place last year to 19th; but there has been no change in the Factor ranking for Infrastructure (54th). This last measurement analyses the efficiency of basic, technological and scientific infrastructure, as well as health, environmental concerns and education. That the ranking has remained flat reflects lack of investment in basic infrastructure.
India is moving fast for development from a “working power” based on a supply of low-cost labour to a “brain power” comprising skilled and educated workers.
According to IDC, China will maintain its position as the largest IT market in the Asia-Pacific region, excluding Japan–making up 32 percent of the region’s IT spending. The Chinese market will be trailed closely by India at 23 percent, IDC said. Both countries are expected to account for the lion’s share of the region’s IT spending at more than 43 percent.
With the encouraging figure of the GDP for the first half of this fiscal year available, the confidence level is pretty high. The finance minister must be pretty happy, but for the higher inflation. Impending pressure of the pay commission and the political pressure for popular projects may be some unpredictable speed breakers worrying the FM that are to be smoothened to sustain the growth and boom.
- Indra
Category: Government Policy/Administration |
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