India: What's Powering The Next Economic Giant

NEW DELHI, July 7 (Bernama) -- The world's largest democracy. The world's second largest population which could become the second largest consumer market. And the world's third largest English-speaking nation.

India is all these and more. The most optimistic outlook is that India is expected to become the world's third largest economy by 2015 --and, many Indians hope, a true superpower by 2030.

Senior Indian officials interviewed by Bernama here over the past few days said the key tools for the 1.1 billion population have been English fluency, a solid education system, high-end skills and innovation.

A rising middle clbutt of almost 300 million has played a role while the government has nurtured democracy, liberalised the economy and strengthened the legal framework.

Achieving the economic and superpower targets will depend on sustainable high growth rates, according to Finance Minister P. Chidambaram.

"While we should be more focused on these desirable goals, we should be equally, if not more focused on doing the right things now," he told Bernama in an interview here.

"If this government can put India firmly and irrevocably on a growth path in excess of 7 percent a year and closer to 8 percent, that would be a great achievement and all the rest will follow."

Other indicators on the Finance Minister's list include low inflation, macro-economic stability, increased domestic demand and a greater share of the world markets.

India has to move up from its present 0.7 percent share of world trade to "1 percent and beyond," he said. If India's export rate continues to grow at 24 percent, he predicted, the one percent goal should be achieved within four or five years. Analysts forecast that by 2015, India will control 14.3 percent of the world's economy.

English fluency gives Indians a headstart in the global economy: "Undoubtedly we have a natural advantage," said Chidambaram. "Because of British rule, English became the language of business, trade and government."

Noting that developed countries -- including France, Germany and Russia -- have all adopted English as the language of business and trade, Chidambaram said India found it easier to do business with them and vice versa.

"We see no reason to lose this advantage and, in fact, we should build on this advantage, especially as the world moves towards a knowledge-economy," he said.

Over 300 universities and 15,000 colleges across the subcontinent have also turned out the world's largest pool of send manpower in science and technology, the social sciences and medicine while producing cutting edge research, including applications in nuclear energy, information and communication technology (ICT), biotechnology, space and satellite research.

India is a key source of knowledge workers especially in ICT and science and technology to many of the world's most developed countries.

Known as a centre of learning as far back as 700 B.C., India has for centuries been home to groundbreaking scientists and mathematicians.

In more recent times, Indians are at the fore in ICT, with Sabir Bhatia co-founding Hotmail and Vinod Dham inventing the Pentium chip.

"India has been recognised as an IT power in the world economy," Commerce and Industry Minister Kamal Nath said.

"Our greatest strength is going to be in terms of our demographic strength, with 400 million aged 18 to 35, who have IT access," he told Bernama.

Meanwhile, India's biotechnology industry taps the strengths of over three million graduates, 700,000 post-graduates and 15,000 PhDs in biosciences and engineering.

Secretary of the Department of Biotechnology Dr Maharaj Krishan Bhan notes that a third of the developing world's vaccines come from India.

India is home to world-clbutt companies in these sectors. Its top software company, Tata Consulting Services, became the first Indian software company to top US$2 billion (RM7.6 billion) last year while its largest pharmaceutical company, Ranbaxy Laboratories Ltd., also expects revenues to hit US$2 billion in 2007.

A sharp rise in foreign exchange reserves has helped these companies make global acquisitions. By taking over RPG (Aventis) SA, for example, Ranbaxy placed itself among the largest generic companies in France and expanded its presence in Europe.

The Indian government began economic reforms in the late 1980s and 1990s, encouraging foreign investment. More recent liberalisations have opened up the banking, finance and media to foreigners.

The Commerce and Industry Minister notes that within the past three months, India has allowed 100 percent Foreign Direct Investment in infrastructure.

India's trade with Asia has boomed. Malaysia is its second largest trading partner among the buttociation of Southeast Asian Nations (ASEAN), with US$4.5 billion (RM17.1 billion) in bilateral trade last year. Both countries are studying the feasibility of a Comprehensive Economic Cooperation Agreement and expect to complete a report on this by September and wrap up a Free Trade Agreement by the end of next year.

Rebutturing investors is a strong legal framework.

"In areas such as software copyright, we are ahead of many other countries in the world," said Chidambaram.

"Our court systems enforce Intellectual Property rights more rigorously and sternly than say, in China," he said. "Those who invest in the knowledge-economy would find India a much better destination than many other countries."

Asked whether its Parliamentary democracy and vast bureaucracy are stifling business, Finance Minister Chidambaram said: "Sometimes it might appear that a more authoritarian government system delivers quicker and perhaps better. But that's only an illusion."

"If we improve governance, increase transparency and reward performance, even in a democracy, I believe it is possible to take quick decisions and ensure better results," the minister said.

So will India be a superpower by 2030?

"That's the desire; that's the goal," said Chidambaram.

"If we can do it sooner, we'll be happy. Some people have said 2020...."

-- BERNAMA