If the BRICs--that' Yes, it's true that opportunities abound in these emerging markets and the numbers exist to support such a claim. But bear in mind there is no blanket approach for U.S. investors to access them, though many of these markets are climbing the same economic trend line to prosperity. Despite that evenly distributed fiscal success, Brazil, Russia, and especially China, are stealing the show. It's time to hear India's story. There has been much focus on China, but we know that the Indian economy has been hot, hence the recent monetary policy tightening by its central bank to control inflation. In addition, positive sentiment within India about their own economic situation, second to China, is extremely high, according to the Pew Global Attitudes Project. Furthermore, the Chinese economy has been so focused on exports and now on greater reliance of domestic consumption of those goods, while India can compete globally and domestically on a different front since their economy has a strong bias to services to enhance the production of goods. Within the last year, the And what's more, India boasts the fifth-largest economy in the world, with a reported annual gross domestic product of $3.56 trillion, growing at a rate of 8.5% annually over the last five years, according to With roughly 1.15 billion people, India accounts for almost 17% of the world's population and by roughly 2040 it will surpass China as the most populous nation, according to the McKinsey Global Institute. India's middle class is expected to increase by more than 10 times from its 50 million to 583 million by 2025. As a result, the Indian consumer market is expected to grow by roughly four times over the next 25 years from its current level of $511 billion in annual spending. In the U.S., we recognize the consumer as a key cog in the economic wheel. In this instance, India is no different. That's not to say the market is without its own risks. Like most emerging markets, political discord is a chief concern for India. Ongoing disputes regarding the Kashmir region in the northwest and enduring tensions with Pakistan on various issues, including nuclear armament, must be understood from a historical point of view and history shows that this conflict will persist. As the U.S. relies heavily on Pakistan to fight the Taliban, they gain favor vs. the interests of India. Perhaps that is why U.S. Secretary of State Hillary Clinton's first foreign trip in office was to India to provide assurance. Then there also is a question of India's ability to control the kind of stratospheric growth it's experiencing, which is why it comes as no surprise that inflationary concerns loom. However, that's common among emerging markets and actually reassuring as it's a beacon of growth in these dark times for the global economy. It's clear with recent rate hikes in India, as in China, Indian authorities are being prudent in controlling growth. Granted, this growth isn't enough to compensate for the problems in the developed world when considering the big picture, but any growth is good considering the poor outlook versus historical norms from the developed economies. That's why some say the emerging markets are overheating and just look good relative to the poor economic conditions among the traditional powerhouses (i.e., U.S., eurozone, Japan). And by some accounts, these dissenters are correct. India has $2 trillion in national debt, but for most other measures they are a nation with a healthy economy. The country runs at a fiscal deficit of 6.6% of GDP. Reserves of foreign exchange and gold are at about $287.5 billion and they have a savings rate of 35% of GDP with an investment rate of 32.1% of GDP, including a handsome chunk earmarked for infrastructure. With a labor force of roughly 500 million people, the greater concern for India is to pull as many of its citizens out of poverty and into the modern middle class. Thankfully, as with other key emerging markets, India has a highly educated population based on a working educational system. Plus increased spending on a developing infrastructure will create employment for many. To build a national highway system or network of paved highways requires considerable labor inputs. Indeed, India is hungry for more electrical power, more roads, more railways and more telecommunication systems throughout the country. Among the companies to benefit from this development are As with Brazil, the budget for infrastructure allows for significant levels of increased employment too, especially considering that unit labor costs are relatively cheap. The imperative for India is clear: they are far behind in keeping up with the needs of a growing and more prosperous population. Now if all of that's not enough to stand out in a family with seemingly limitless growth potential, what is? Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
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