India's growth prediction: Synopsis

As my previous article: "India's Scorching Economic Growth" has become pretty long, I felt a need to give a shorter synopsis of that. In short, India could easily get to double digit growth in the long term and maintain it for over a decade. While this seems to contrary to conventional wisdom, let me give the growth components.

1. Telecom & Electronics - This sector has been having 100%+ growth rate for the last few years. Since, the teledensity is still around 15% this sector is looking to grow 300% in the next few years, just on numbers. PCs, Broadband and Internet have even more low density and these all can have more than 100% growth per year for a decade, and the value added services from Telecom will grow as users grow higher in the ladder. This would also push India as a major electronics player by producing most equipments at home.

2. Agriculture - Indian agricultural productivity lags behind world standards by a factor of few times though it has some of the best climatic and land advantage than all the other major nations, and it has one of the highest wastage. This could all change with more infrastructural, technology and organized retail growth, and has potential for over 300% growth in a decade just by cutting down wastage and increasing per-hectage productivity to international standards.

3. Hotels & Tourism - India has the world's one of the lowest number of hotel rooms per capita, and in the medium term it looks to grow by 100% with the 2010 Commonwealth games & 2011 World cup. Airlines have cut fares by 75% in some sectors, Chinese are growing in prosperity, India's infrastructure and image are improving and India's middle class is bulging. Thus, foreign tourism could easily grow 10 times from the current low figure of 5 millions to over 50 millions in a decade and India's current 100K total rooms could easily grow to a few millions.

4. Auto - From nowhere, India has grown to become the largest auto component manufacturer in the world. Chennai has become a major auto hub with four major manufacturers including BMW, and Tata Motors is the world's largest commerical heavy vehicle producer. Since, companies are looking to produce cheap cars by using low cost of designing & manufacturing in India, and Indian middle class is bulging, India's current car ownership of less than 1% of population could grow over 10% in a decade, meaning a 1000% growth over 10 years.

5. Organized Retail - As this sector is opening up and it is extremely small by world standards, the coming of WalMart and growth of Indian players like Reliance, Tata, Bharti will cause over times growth in a decade.

As all these sectors grow, there will be skyrocketing growth in construction, metals & consumer durables as people will get richer. With each sector having potential to grow more than triple digits in a decade, I dont think achieving double digit yearly growth is a too much of a problem for India.