India is one of the few economies in the world which have resiliently weathered

the global economic recession with 7.4% GDP growth in 2009-2010. Favorable
demographics skewed towards younger and productive population, prudent
banking regulations, growing disposable income, the macro-economic indicators
like GDP, exports and factory output, all place India among the most attractive
investment destinations.

India͛s explosive domestic consumption story has placed India as one of the safest
investment bets and a premier destination based on allocation priority of global
institutional investors.

India as a prospect for investment is bright because of many reasons such as:

÷6 xhe biggest advantage of investing in the Indian market is its demography.

India is the second most populous country with over 1.18 billion people as
estimated for April 2010, with 50% of its population below the age of 25
and more than 65% hovering below the age of 35. xhis implies that the
majority of the population here belongs to the youth category signifying
the ability to work as well as consume. Moreover youth forms an excellent
target market for products as their demands are huge.
÷6 India͛s per capita income is expected to grow 17.3% at Rs. 54527 in the
financial year 2011 implying that there will be greater demand for goods
and services due to increased standards of living.
÷6 xhe Indian economy is growing at 8.6 percent for the financial year 2011.
÷6 According to Nasscom, Ix industry is going to see 19% growth in the
FY2011. xhis implies that the Indian economy will have a trickle-down
effect on all the upcoming sectors because of cost efficient technology and
higher job availability reducing the dependency to import technology.
÷6 xhere is a rising scope of medical tourism and drug manufacturing in the
economy. It is reported that India offers very feasible rates with substantial
price cuts which is expected to be one-tenth of the cost of medical
treatment available in the economic superpowers.
 ÷6 According to Columbia University report, India has been ranked among the
world͛s top three preferred investment destination. Several factors such as
liberalization in FDI, several economic sectors, a globally competitive
workforce, rapid growing GDP and market growth are the main drivers of
foreign investment in India. Apart from them, India has been providing lots
of incentives to the investors like partial convertibility of rupee, devaluation
of rupee (1990-1991), introduction of FEMA.
÷6 India gives its investors the maximum cost advantage with the least cost
comparative advantage. xhat is the reason why India is still one of the top
outsourcing destinations.
÷6 xhere is a big debate over China being a better investment destination, but
Larry Fink, CEO of the world͛s largest fund manager BlackRock, said that
India will be a better investment destination over China for global investors
for at least coming two years till the latter moves in to the next growth
phase. Moreover, India provides better communication facilities to global
investors over that of China.

India as an investment destination in 2020:

On March 17, 2010, Edelweiss Capital has released a research report rë

 
 
6which says that India͛s Gross Domestic Product (GDP) is likely to
quadruple over a period of 10 years. It further states that India is likely to be a US
$ 4.5 trillion economy over the next decade.

xhe Edelweiss Capital report states, r

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xhe report says that the investment in infrastructure is set to witness a three-fold
increase from Rs. 21 lakh crore in the Eleventh Plan to Rs. 62 lakh crore until next
10 years.
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xhe report says that as the economy develops, the share of the services as part of
GDP goes up. As the economy develops on the back of growth in real sectors like
manufacturing, industrial production, agriculture, etc., it needs to be supported
by ancillary services like Banking and insurance from financial services sector.
                   
    
    
Other critical services which should grow along with the forward march of the
economy are education, healthcare, recreation and Ix
services. Education and healthcare form a critical part in long term fundamental
sustenance of the economy on the growth path.
Proper education ensures higher literacy standard which in turn leads to declining
unemployment within the economy. xhe report also estimates a jump of 6 times
in domestic pharmaceutical and healthcare industry.

ë  ! "

According to the report, the gross domestic savings would grow by 3.8 times from
Rs.19 trillion in FY09 to Rs.72 trillion in by the end of the next decade. xhis
increased savings could lead to a huge surge in domestic consumption
expenditure which is set to triple from Rs. 30 trillion in FY09 to Rs.113 trillion in
FY20.

xhe report points out that a percentage of the deprived population category, in
terms of allocation of income distribution pattern within the country, is likely to
come down substantially from 51% in the year 2010 to 34% in the year 2020. As
per the report, the deprived category of population is likely to be reduced from
133 million households to 100 million households. xhis would reduce the
inequality among various population classes
xhis shift in category for deprived population would tantamount to increasing
growth in consumption-oriented middle and higher-middle class population from
47% in 2010 to 60% in 2020.

xhe actual numbers of population under this category are estimated to grow from
120 million households to 180 million households. A substantial growth
in consuming class population could serve as a self-igniting phenomenon for the
Indian economy.
  #  " $ 
xhe India 2020 report states that the working age (20-59 years) population is
likely to increase by 20%, which will ensure higher per capita income and lesser
percentage of idle population with no contribution to productive output of the
economy.

xhe report also states that the population to be categorized under the Aged group
(above 60 years) is also likely to increase manifold to the extent of a whooping
45%. xhis age group could herald an increasing need for medical and healthcare
facilities apart from strong financial products like retirement and pension funds.

  

 
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Riding on the back of some of these supportive income distribution patterns
and working population strength, the report says the organized retail is set to
grow from Rs.1000 billion in FY09 to Rs. 6260 crore in FY20.
With the growing culture of mall mania and increased discretionary spending in
the hand of exploding working age population, the organized retail is set to
receive a substantial boost of a whooping 6.3 times.
With rising income, the report further states that the demand for Urban Premium
housing is set to grow big time from Rs.116 billion in FY09 to Rs.757 billion in
FY20. xhis posh niche of the real estate industry is set to receive the biggest boost
as against any other industry over the next decade. xhe demand for Urban
Premium Housing is set to rise a whooping 6.5 times within next 10 years.

xhe India 2020 report of Edelweiss Capital seems to be betting on India͛s

population demographics and its income distribution pattern which is estimated
to go a long way in stimulating domestic consumption and investments into rising
needs of infrastructure support.
LINKS:

http://wn.com/edelweiss_capital_ltd_on_'india_2020_seeing_beyond'

http://www.ibef.org/artdisplay.aspx?cat_id=60&art_id=14328

http://indianeconomics.org/

http://www.livemint.com/articles/2010/03/13150710/India-among-world8217s-
top.html

http://www.rbi.org.in/scripts/Annualpolicy.aspx

http://en.wikipedia.org/wiki/Demographics_of_India

http://xa.yimg.com/kq/groups/15268335/1285727186/name/NileshShah-
Interveiw.pdf

India͛s GDP to touch 205 xrillion Rupees by 2020: Edelweiss Report6

SIxES EXCLUSIVELY SURFED FOR INFORMAxION:

www.economictimes.com

www.livemint.com

www.google.com

www.wikipedia.com

Compiled By:

Sourav Hajra

Vineet
Choudhary