Much of India is still mired in poverty, but just over a decade after the Indian economy began shaking off its statist shackles and opening to the outside world, it is booming. The surge is based on strong industry and agriculture, rising Indian and foreign investment and American-style consumer spending by a growing middle class, including the people under age 25 who now make up half the country’s population.
After growing just 4.3 percent last year, India’s economy, the second fastest growing in the world, after China, is widely expected to grow close to 7 percent this year.
The growth of the past decade has put more money in the pockets of an expanding middle class, 250 million to 300 million strong, and more choices in front of them. Their appetites are helping to fuel demand-led growth for the first time in decades.
India is now the world’s fastest growing telecom market, with more than one million new mobile phone subscriptions sold each month. Indians are buying about 10,000 motorcycles a day. Banks are now making $15 billion a year in home loans, with the lowest interest rates in decades helping to spur the spending, building and borrowing. Credit and debit cards are slowly gaining.
The potential for even more market growth is enormous, a fact recognized by multinationals and Indian companies alike. In 2001, according to census figures, only 31.6 percent of India’s 192 million households had a television, and only 2.5 percent a car, jeep or van.
Foreign institutional investors have poured nearly $5 billion into the Indian market this year, already more than six times last year’s total. The Bombay Stock Exchange’s benchmark Sensitive Index has risen by more than 50 percent since April, hitting a three-year high. Foreign exchange reserves are at a record $90 billion.
This Diwali will be the most optimistic in many years. I think what is happening in India is that the people are now feeling much more confident and positive about tomorrow. The government is running a media campaign called “India Shining” highlighting the achievements.