Happy 73rd India! Around for 1000s of yrs, but in charge of our destiny as a modern nation only since ‘47. In last 20 yrs, we’ve 6x-ed our GDP, touched the moon, left for mars, gone nuclear, digital & truly entrepreneurial. Major challenges yet to fix, but much to celebrate too

For most of the last 2000 yrs, India was ~25% of the world’s GDP (& pop). Under Mughal empire, we crossed Qing China & Western Europe as the world's largest economy. However, by end of british rule we were 1-2% of world GDP; a number we breached again in 1991 thx to “license raj”

It has taken a while, but we seem to be on our way -- especially since the early 2000s. Graph doesn’t cover it but it was nice to say hello to the UK and France as we passed them in 2019 ;-)

We had been doing well pre-covid but expect major pullbacks by EOY; only the engine of this economic train has stopped so far but the last bogey is still running & has no clue what’s ahead. Credit crunch will be a major rate-limiters of growth esp in credit hungry businesses.

However, one ray of hope is that we have always been a nation of savers - 60% of the gross national savings are in household savings, so we will likely dip into reserves to tide over some of the covid-19 crisis. That said...

We are also a nation of youth &, with increased focus on consumption, our savings rates have declined since 2010. This will affect the younger population more. A falling savings rate could also lead to Indian companies borrowing more from overseas markets, raising external debt.

The stock market, OTOH, has mostly recovered from the covid shock. However this is no indication of a healthy economy and IMO there is much pain ahead before market fundamentals are trustworthy.

All things being equal, the future looks promising. Our demographic dividend is the strongest in the world - we will have added 200M people to the working population between 2013-30 compared to US (10M), & China (-19M). India’s working pop will surpass China by 2030 leading to...

...significant growth in household income. Already our mid & upper middle class is seeing strong upflow ( #s are # of households). One should expect a lot more disposable income driving the change from a savings first to investment & consumption first economy in the next 10 yrs.

Which promises return of the East to the world economic center-stage with much of global middle-class spending driven by India, China, and rest of SEA. My hope is that we can (and should) do this while taking not just tier1/2 cities but all of India along for the ride.

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