X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
India: Recipe for growth - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Sep 20, 2004

    India: Recipe for growth

    If one were to ask what is the recipe for India's economic growth, the common answers would be -

    • Growth in agriculture, led by good monsoons, and/or

    • Growth in industries, led by strong demand, and/or

    • Growth in services

    However, it is pertinent to ask 'how do we sustain economic growth over a long period of time?'

    If one were to peep into history, there have been several successful strategies. For instance, Britain became the economic leader of the world in the 1800s by pioneering the industrial revolution. This included inventing steam engines and railroads, and emphasizing free trade. On the other hand, in the mid-1900s, Japan made its mark on the global economy by first imitating foreign technologies, protecting domestic industries from imports and then, developing tremendous expertise in manufacturing and electronics.

    Now, even though their individual paths may differ, all rapidly growing nations share certain common traits. The same fundamental process that helped Britain and Japan, as mentioned above, seems to be now at work in the developing nations like India and China. While China seems to have taken a momentous lead over India, the latter (India) seems to be gathering pace. We can definitely move into a higher economic growth trajectory provided we are able to continue with the current momentum of reorganization of our economy.

    The three wheels of growth

    The engine of sustainable economic progress depends on the three wheels of growth, no matter how rich or poor the country is. Let us study these three factors and understand how India fares on each of them.

    Human resources: A country might buy the fastest of computers and the most sophisticated of engineering equipments. However, these can be used only by skilled and trained manpower. This is indicative of the fact that apart from quantity, the quality of manpower plays a major role in a country's long-term sustainable development. India is blessed on this front. India boasts of a talented pool of human resource that is a result of the country's long-drawn approach towards consistently improving its high quality technical education system. However, to sustain this competitive advantage, elementary and primary education standards need to be improved dramatically. We need a political vision for the same, which has been lacking for some time now.

    Natural resources: Countries like Canada, New Zealand and Norway have been able to grow primarily on the back of their natural resource base (agriculture, fisheries and forestry). India seems to have done its bit on this front. We are the world's largest exporter of certain food items and precious metals. However, where we seem to have lacked is in the development and proper utilization of our resource base. Nurturing private-public sector partnership could be one way to utilize these natural resources more efficiently.

    Capital formation: In the twentieth century, the developed nations focused on attracting capital towards investing in roads, irrigation and power plants. This not only improved infrastructure facilities but also improved productivity. Now, many are of the belief that computer technology and information superhighway will do for the twenty-first century what railways and highways did for the previous one. However, services is not 'the answer' to job creation from the long-term perspective. Manufacturing and agricultural reforms are extremely critical.

    While the above three wheels of economic progress are necessary to sustain growth for any country, they are all the more important for developing nations like India. Also, if India has to move towards a higher and sustainable level of economic growth, political vision is of paramount importance. In that case, investors in the Indian growth story do have to take a long-term approach to investing. Therefore, it is important not to get carried away. We still have a long way to go.

     

     

    Equitymaster requests your view! Post a comment on "India: Recipe for growth". Click here!

      
     

    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    Why NOW Is the WORST Time for Index Investing (The 5 Minute Wrapup)

    Aug 18, 2017

    Buying the index now will hardly help make money in stocks even in ten years.

    Trump Takes a Beating (Vivek Kaul's Diary)

    Aug 18, 2017

    Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process) (The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE SENSEX


    Aug 18, 2017 (Close)

    MARKET STATS