Thought this might be of interest to some. Remember when the Indians were talking about a population explosion? :)

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Source
- http://www.economist.com/daily/news/displaystory.cfm?story_id=9135582&top_story=1

India's consumers
The coming boom
May 3rd 2007 | DELHI
From The Economist print edition

India's consumption could leapfrog Germany's in two decades

IN CASE any potential investor has missed India's run of 8% growth and billion-person potential, the consultants at McKinsey have provided a useful jab in the ribs. In a report on India's consumer market published on May 3rd, they have added detail to the probable economic explosion ahead. Assuming annual growth averages 7.3% over two decades—a reasonable bet—India may overtake Germany as the world's fifth-biggest consumer market by 2025. It predicts the middle class will expand from 50m to 583m, leaving only a fifth of Indians in the bottom household-income bracket, earning less than 90,000 rupees ($2,200) a year (see chart).

All sorts of businesses will profit. But the report, “The Bird of Gold: the Rise of India's Consumer Market”, suggests where the opportunities will be greatest. First, among the relatively rich. For now, the poor and lower-middle class together account for 75% of total spending. By 2025, McKinsey predicts consumption will be dominated by the middle class, to the tune of 59%, and the rich, accounting for 20%. Second, in the cities. It expects consumption in urban areas to rise from 43% of the total now to 62% by 2025—even though most Indians will still be rural.

Third, as spending on discretionary items increases, some markets will balloon faster than others. While the share of Indians' spending devoted to food, drink and tobacco will fall from 42% to 25% by 2025, health-care spending will rise from 4% to 13%.

If McKinsey's growth prediction looks reasonable, others look optimistic. For example, the report notes that spending on education and infrastructure will have to increase to support its analysis. Yet it is still hard to imagine so many hundreds of millions of Indians being educated to a standard befitting middle-income status. Transforming the thousands of rotten schools might prove impossible, even if sufficient money can be found. Given India's relatively weak fiscal position, it perhaps cannot be.

If the golden bird is to be a phoenix, and not a chicken, predictions such as these should spur the government to act on such problems. Suman Bery, director of the National Council of Applied Economic Research, a think-tank, lends a word of caution: “We've had super-fast growth only for the last four years. We can still throw it away.”

India and China are paper tigers who only have a huge Real GDP/Economic growth in their economic data releases but in reality the statistics are cooked up to suit their economic ratings (for loans, credit ratings, etc.)...A classmate of mine who worked for the Stats dept of the Chinese Reserve Bank. said once that there is no way one can avoid a biased reading as China is such a huge country and though villages make a majority of its landshare and popultaion, most of the sample readings are taken in the cities as the time constraint would be too great if they did it correctly. Also, since the task of collecting data is extremely demanding/strenous/time consuming and requires moderate expenses, a lot of the numbers are then estimated to look good enough to be included in the survey reading.

What makes me think that India would be any different?? Instead, it may be worse than the above.

Oh sure you should not run after one set of numbers. But this is not the only study out there that depicts a trend. There are a couple of others that corroborate the same trend - although they may differ on the rate and timing

At the end of the day, these are just forecasts. As with any form of financial and economic modeling, they could all change if the underlying assumptions change. The numbers that interest me most are those related to the GDP composition - specifically the currently discrepancy between employment and production - and the potential this holds for increased economic opportunities. 30% of the people producing 60% of the output and 60% of the people producing 20% of the output. That is bound to undergo a correction if the current trends continue.

Yes, needless to say, I would hope any one in their right minds making a decision about India would look at just more than this survey. The composite picture painted by this and many of the leading economic indicators show an economy undergoing a correction. Which at this point, based on all indicators, looks like an upward correction. Growth and wealth disparities exists but their impact on the current economic trends can be debated and will probably not be known for a while to come.

Just my thoughts. Some good information (and not-so-good too :D) out there in the posts :)

Samsara - Very interesting perspective. But I wonder how much and for how long the GDP numbers can be cooked. The purpose of the numbers for me, as for many others, is not so much to come up with a comparison to other countries, but to look for trends within those numbers reported from the same source. I personally would not allocate too much weightage into something like this.

Besides, the export and import numbers can be verified from the other party so it is unlikely that they can pad it up or down for long. You can often use those numbers to corroborate the rest of the GDP numbers that have been reported and can tell if they are wildly off.

"Dhotis and their media are really good in bullshitting.. ; u can see lots of news these days like " india will be super power in 50 years, india will be this and that after 20 years" but reality is infrastructure really sucks.. and their attitude is crap.. "

If they are bullshitting, it is not too hard to tell. At least for me. You need to be able to separate the hype from the substance. Sure there is hype, the BJPs "India Shining" being one of them, but I dont quite understand why people are in denial of the data and facts.

And as for their attitude, if their read your post, they'd prolly say the same thing about yours - specifically your use of the derogatory to describe them.

"And as for their attitude, if their read your post, they'd prolly say the same thing about yours - specifically your use of the derogatory to describe them."

I love your reaction to the follow poster's comment about attitude of Indians. Sorry for quoting another Indian, but Gandhi said 'be the change you want to see in the world' and whining about how their attitude is 'crap' is least constructive and doesn't help.

Good to read your post after a long time Captain. :-)

Bostongirl!!!

Good to see you back. It's been a long time indeed! How have you been? Hope all is well. Last I remember, there were wedding bells in the air :) How did that go?

Best wishes.

Went wonderfully well...still havent fought with the hubby so life is good :-)

Now getting back to the normal routine of working really hard and yes, back to sajha.

LOL!! That sure is a good life :)

Good to hear everything went well. Welcome back and hope to 'see' you around.

:)

Thank you! will definitely be around.