The Evolving India - 2020

This assessment study looks at how various economic and demographic parameters
are evolving. It predicts conditions in India by 2020 if these trends continue to move
in the 2010s the same manner as they have been over the 2000s
Overall GDP growth will be around 9.6%
annually, even if the government does not
do anything.
It would be higher if agriculture and
electricity, gas and water supply are able
to break through their long term
institutional constraints.
It would be lower if inflation eats into
macro-economic stability and law and
order conditions get out of hand.
 Trend Growth: Economic
Growth in the 2010s

Agriculture investment will finally resume after many decades of relative sparseness, but this
sector could well grow much faster than the expected 3.4%
Manufacturing opportunities would improve on account of rapidly growing domestic market as
well as international markets – however energy and wage price inflation will play a role.
Transport, storage and communications will be the driving force of growth in the country in the
2010s – A large road network is going to be operational, ports are rapidly improving, air transport
infrastructure is being overhauled, and a strong ecosystem has been created for the telecom
sector

The trends of the 2000s will continue – but growth will be much faster
 Economic Structure: An even more
of a services economy
GDP at Factor Cost
INR Trillions ('99-00)

80.0
Community, Social &
Personal Services
70.0
6.5 Financing, Insurance, Real
Estate & Business Services
60.0
11.1 Transport, Storage &
Communication
50.0
Trade, Hotels & Restaurant Overall GDP growth
17.8
will be around 9.6%
40.0 Construction
annually, even if the
government does not
4.5
30.0 11.2 Electricity, Gas & Water
5.4

5.1
Supply
do anything
6.3 Manufacturing
20.0
5.8 0.8
2.6 Mining & Quarrying
0.7 9.5
10.0 5.4
0.6 0.9
5.8 6.3 Agriculture, Forestry &
0.0 Fishing
2009-10 2019-20
Source: District Domestic Product of India, 2009-10, Indicus Analytics

Services would be three fourths

Visitof
Site the Indian economy by 2020
 Household Consumption

Multiple implies growth factor between 2009-10 and 2019-20. Source: Expenditure Spectrum of India, 2009-10, Indicus Analytics

The overall household budget would be about 2 times higher than now in real terms. The share of
food and related products would fall from 40% to 34% (though in absolute amounts it would be
about 1.8 times higher). Transport, education, health and recreation would all be among the most
rapidly growing items of consumer expenditures.

Per capita income growth 8% pa – households will earn about double that they do now
 What will Indians eat in 10 years?

Source: Expenditure Spectrum of India, 2009-10, Indicus Analytics

Lifestyle changes will show up in a major way in our eating habits. That is the next
tipping point – cooking at home will continue, and we will not do away with kitchens as in
Thailand

Processed foods & eating out will be a rapidly growing component of household
budgets
 How will they spend on services?

Source: Expenditure Spectrum of India, 2009-10, Indicus Analytics

Recreation and communication that will drive household expenditures the most. The
Indian household will move more and more towards lifestyle enhancing expenditures -
and another tipping point will be reached in terms of the expenditures on tertiary
education and health
Health care expenditures will grow rapidly, and so will those for education
 Penetration of Durables

Estimates Using penetration trends from NSSO Data

Large numbers of both rural and u7rban households will benefit from access to electricity
as well as financing to purchase and operate electric appliances. The only threat to this
scenario? Electricity supply.

A surge in durable ownership by households is one of the most unambiguous trends

 Energy

Energy use (kt of oil equivalent)

1000000

2019-20
900000

800000

700000

600000

2004-05
500000

Source: CSO, World Development Indicators and Indicus

400000

300000
estimates

200000

100000
100000 1100000 2100000 3100000 4100000 5100000 6100000 7100000 8100000 9100000 10100000

India will not become an energy intensive economic power in the coming decade. India’s
GDP in 2019-20 would be about 4.5 times what it was in 2001, however, total energy
requirement would have barely doubled since then. Endemic lack of energy has created
an economy that is not as energy dependent as (say) China. India’s growth relies more
on services that are typically less energy intensive than manufacturing.

India will need more and more energy to service the demands of a growing economy
 Consumption of Agriculture
Commodities
Annual growth in consumption till 2020,
%

Forestry
6.7
The demand for wheat will surpass
Other food
5.37 that for rice on account of increased
Fish
6.32 incomes and changing preferences,
Milk
3.86 not to mention higher population
Other agro products 6.29 growth in the northern part of the
Cattle and meat -0.61 country. Consumption of meats will
Plant-based fibre 4.32 stagnate and may even fall on
Sugar 5.04 account of higher relative prices.
Oilseed 4.08
The consumption of cash crops will
Coarse grains
2.28
continue to rise and the demand for
Wheat
2.17
milk, and fish is likely to grow
Rice
1.03
rapidly.

Estimates drawing from joint work done by Bibek Debroy and

Laveesh Bhandari for FAO

Agriculture will steadily but slowly move towards being more of a cash crop sector
 Poverty

Estimates using the India Labout Report 2008

300 million people are expected to be living under extreme poverty as defined by the
Planning Commission. And this figure has been more or less stagnant over the last 4
decades. If the current trends continue as many as 260 million persons would remain
under extreme poverty even by the end of the decade. Rapid reforms can however
dramatically reduce these numbers

Expect that social safety nets would remain critical for India
 Urbanization

Indicus estimates using Registrar General of India data

About 32% of India’s 1176.7 million people reside in Indian cities currently. This will
increase to about 35.4% of the total population of 1326.2 million by 2019 – an
addition of about 100 million. The bulk of this new urban population will comprise of
recent migrants

An additional 100 million will move into cities

 Income Distribution

120.0

100.0 96.7
H o u s e h o ld s (m illio n s )

Household
Annual
Income
80.0 76.3 (K=1000)

<75K
75K-150K
150K-300K
60.0 300K-500K
500K-1000K
49.0 1000K-1500K
>1500K
40.4
40.0
32.6

26.1
22.9
20.4 19.1 18.8
20.0 16.5 16.0
14.0 12.7
11.7
7.8 7.5 7.5
6.0 5.0 5.9
1.8 2.2 3.2 1.8 1.8
0.7 0.7
-
Urban Urban Rural Rural

2009-10 20019-20 2009-10 20019-20

Source: Market Skyline of India, 2009-10, Indicus Analytics

Households earning less than 75,000 Affluent households (> 1 million per year) will rise from 4 million
per annum will fall from 23 million to currently to 12.5 million in urban areas; and from barely 1.5 million
less than 12 million in urban India and to 3.6 million in rural areas. But the greatest increase is going to
from 96.7 million currently to less than be among the middle classes – the great Indian middle class will
77 million in rural areas. finally become a reality in both rural and urban India.

India will progressively become less poor and the great Indian middle class will finally
become a reality