Economy

New superpower: why India could soon catch up with China

Blake Barlow / Unsplash

India has a terrible reputation in much of the world; the country’s image is in the bucket. With almost 1.4 billion people today, the South Asian nation is considered by many to be a symbol of poverty, a juggernaut from crowds and slums, a haven of illness, violence, ominous caste, religious fundamentalism and pollution.

There is a core truth in such clichés. However, they only cover a small section of the complex economic, political and social situation on the subcontinent – and blind many positive Simply facets. Because: Numerous indicators and current trends indicate that the Republic of India will play a key global role in the 21st century – not unlike the People’s Republic of China, which has long been taken seriously as a new “superpower” and as an antagonist of the USA.

India will overtake China in population in a few years

According to UN estimates, India will count to almost 1.5 billion people in a few years. It will overtake and overtake China in terms of population and not only rise to become the largest nation on earth, but also to greatest people in human history. India’s population growth is currently around 15 million a year, a good 40,000 during the day. Every two weeks, south of the Himalayas, Bremen, Dresden or Hanover is added, to put it bluntly. The United Nations predicts that India will have 1.65 to 1.7 billion inhabitants in the middle of the 21st century. It would be almost as populous as China and the United States combined.

India is already the fifth largest economy in the world on a dollar basis, behind China, the United States, Japan and Germany. In terms of purchasing power parity, in which different price levels are taken into account and which is more meaningful, it is currently in third place in front Germany. The economic growth rates on the subcontinent suggest that India will also catch up with Japan and (about 2040) the USA within a few years. In the second half of the 21st century it could even be considered the top spot largest economy in the world take in. Raghuram Rajan, for example, believes this is possible, until 2016 head of the Reserve Bank of India, India’s central bank.

Around 300 million Indians speak English, lingua franca of the global business world

Especially in comparison with China, the most impressive economic success story of the past decades, the Republic of India has two decisive locational advantages. For one thing, the country has been stable since the declaration of independence in 1947 democracy. Governments in the capital city of New Delhi and in the states and territories are anchored and legitimized in the electorate and society in a way that the communist regime in Beijing can only dream of with its model of authoritarian state capitalism. On the other hand, about 300 million Indians speak English, Lingua franca of the global business world.

In addition to Germany and many other EU countries, China, Japan and even the United States have a demographic problem in comparison to India, the dimensions of which will continue to grow dramatically in the coming years and decades: the aging of society. Indian society, on the other hand, is extremely young. The Median age is around 26; Around 700 million Indians are each older and younger than their mid-20s.

No other country has so many listed companies

Many Indian companies are already playing in the global top league. India has more listed companies than any other country. According to the World Federation of Exchanges (WFE), a global exchange association, are round 5,000 joint stock companies listed on the Bombay Stock Exchange (BSE) in Mumbai. According to the WFE, the New York Stock Exchange (NYSE) has around 2,300 companies, the American technology exchange Nasdaq around 3,000, and the Deutsche Börse only a few hundred.

But Corporate India is not only characterized by mass, but also by class in many industries. In particular, a conglomerate based in Mumbai is currently dominating the headlines: Reliance Industries (RIL). Originally an oil and chemical giant, RIL has been with the newly founded subsidiary since 2016 Jio turned the Indian telecommunications market upside down and made it into the market leader in just three years with currently around 400 million smartphone and cell phone customers.

The Reliance Group with its boss and major shareholder Mukesh Ambani is also the largest retailer between Kashmir in the north and Kerala in the south – and thus a kind of proxy for investors in the Indian economic area. Jio Platforms in particular is expected to have a bright future and could mutate into a kind of “Indian Alibaba” in the coming years. The US financial elite has just bought billions of dollars from Jio Platforms. Facebook paid $ 5.7 billion for about a 10 percent stake; Google said last week that it would invest $ 4.5 billion. Several investment companies are involved, each with ten or nine-digit dollar amounts.

The pharmaceutical companies Sun, Cipla and Glenmark are now considered the world’s pharmacy

The list of Indian blue chips is long, however. The Tata-Group, another conglomerate from Mumbai, has a similarly broad base as Reliance and provided acquisitions of British companies such as years ago Jaguar Land Rover (by Tata Motors) and Tetley tea (Tata Global Beverages, today Tata Consumer Products) for furore. Tata is now the largest industrial company in the UK. The steel daughter Tata Steel had planned a German-Indian joint venture with ThyssenKrupp two years ago, which had burst due to antitrust concerns.

Leading banks like HDFC bank (private) or State Bank of India (with the state as anchor shareholder) are now among the top 100 in the world. Indian pharmaceutical companies like Sun., Cipla or Glenmark are in many ways in the 21st century what their German predecessors were in the 20th century: the pharmacy of the world. Approximately one billion of the prescriptions issued in the United States in one year are used today for medicines made in India. India’s pharmaceutical giants supply medicine to a large part of all emerging and developing countries.

Millions of IT experts work in the high-tech centers Bangalore, Hyderabad and Pune

However, the most important, most sustainable industry of all is India’s IT sector. To understand their dimensions, a comparison with SAP is helpful, currently the most valuable DAX company that employs around 100,000 specialists worldwide. India’s IT corporations, however, although their name is largely unknown in Europe, are already playing in a different league in terms of numbers. Tata Consultancy Services (TCS) has a staff of more than 400,000; Infosys of a good 200,000; Wipro of more than 160,000. Add to that HCL Technologies (120,000), Tech Mahindra (more than 100,000), Cognizant (a US company with almost 200,000 employees in India), DXC Technology (a good 150,000) and many more. In total, India has several million IT experts, especially in the high-tech centers of Bangalore, Hyderabad and Pune – and of course in Silicon Valley, California, the technological pacesetter of our era.

India has been experiencing a second wave more extensively since 2014 under Prime Minister Narendra Modi Economic reforms. (P.V. Narasimha Rao, together with his finance minister Manmohan Singh, initiated the first phase of liberalization in 1991.) The state is investing heavily in the federal and state levels Infrastructure – in streets, airports, waterways, local public transport. Millions of public toilets have been built in the past six years. New Delhi pushed ahead with the expansion of statutory basic health insurance, especially for poorer social classes, and bank accounts for everyone within the framework of the JanDhanProgram (for example: “Volkgsgeld”).

Not every reform was successful. In 2016, for example, Modi’s demonetization – de facto a ban on cash overnight for 1.5 billion people – went completely wrong. But many other things have significantly improved India’s legal and economic framework in recent years, such as the VAT reform and a new one Bankruptcy law.

Compared to India, the German world of work is a leisure park

Finally the Work ethic in the country that quite a few in the “West” think they know to be poor – for example in comparison with the well-known, hard-working Germans, who are known to be hard-working and hard-working. Since this is a sensitive topic, a very serious source is cited here, namely Mohanda’s “Mahatma” Gandhi, who wrote a good 100 years ago: “We are thrown [Indern] We are a lazy people, whereas the Europeans are very hardworking and entrepreneurial. “(Hind Swaraj, 1909).

Such stupid clichés from outside observers are carefree of any expertise. The Swiss major bank UBS, for example, examined the average annual working hours in 77 major cities worldwide (for 2018). Mumbai, India’s economic capital on the west coast, was number one with 3,315 working hours, New Delhi (2,511 hours) fourth. World metropolises such as New York, Shanghai and Tokyo followed far behind. In large German cities, UBS again determined values ​​between 1,770 and 1,830 hours a year. However, this estimate may be too high; the OECD assumed, for example, that the average number of hours worked by salaried and self-employed persons in Germany in 2017 was only 1,356 hours. In short: compared to India, the German working world is a leisure park. Indians work roughly twice as much as Germans – with generally lower real incomes. A case of “laziness” and poor work ethic? Absolutely. But not laziness in India.

The still young 21st century is often interpreted as the “Asian” century – which should mostly signalize: the “Chinese” or “Pacific”. The Chinese economic area is undoubtedly the most important in Asia at the moment and will remain so for the foreseeable future. However, not only has the “Middle Kingdom” experienced a phenomenal economic upswing, but – with an interval of around twelve or 15 years – India, the greatest democracy in world history. We all in the “West” are well advised to keep a close eye on those of India in addition to China’s. With many parameters, both billions of peoples – yes: even the supposedly so “poor”, “sloppy”, “backward”, “dirty” India – will overtake and depend on Europe.

Michael Braun Alexander is one of the most distinguished financial journalists in Germany. He has been writing about the stock exchange and the economy since 1995. a. as a correspondent in Mumbai and New York and as a columnist at the Picture on Sunday. India has just appeared Superpower: Rise of an Economic Power, its twelfth book, published by FinanzBuch Verlag, Munich (400 pages, 22.99 euros, e-book 19.99 euros).

Of the The author points out that he is a shareholder in some of the companies mentioned in the text.

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