India to topple Japan as world's 3rd-largest economy

http://timesofindia.indiatimes.com/business/india-business/India-to-topple-Japan-as-worlds-3rd-largest-economy/articleshow/10052481.cms

by Garbage • 15 years ago

117 102 15 years ago

timesofindia.indiatimes.com

Triumvark• 15 years ago

India has almost 10 times the population: http://www.wolframalpha.com/input/?i=population+of+india+%2F...

brador• 15 years ago

So it's basically quantity over quality?

sagarun• 15 years ago

I am sure India has improved a lot! But India has lot of other problems,

1. India has a family centric society , where welfare of the family gets priority than the welfare of the nation, which is one of the factor for rampant corruption (IMO).

2. The infrastructure is poor.

3. The divide between rich and poor is high! (income inequality)

4. The Public sector is very slow to respond to the growing needs of infrastructure! They have no clue at all!

5. There is still caste system in rural India, where they don't respect fellow country men as a human being.

6. The politics is only for the rich and heirs of powerful politicians (the parliament is filled with sons and daughters of old politicians read:family business)

India has a long way to go!

tsycho• 15 years ago

I agree with most of your points, but I don't think #1 (family-centric society) is the problem, or even a direct driver of corruption. If you were referring to nepotism, then I think that exists all over the world. An overall corrupt climate just makes it easier to practice nepotism.

mynameishere• 15 years ago

I know nothing about India but the "family-centric" stuff is easier to understand as a problem if you phrase it "clannish". And that is actually a huge problem in some areas.

Symmetry2• 15 years ago

Its a problem because if you don't ask for a bribe, you're selfishly throwing away money you could you use help out your cousin just out of fear of getting punished. And in India you probably do have some cousin who needs the money because their car broke down/their child is getting married/whatever.

mihaifm• 15 years ago

In terms of nominal GDP they are still far behind (India 10th place, Japan 3rd), but they score well at PPP due to low costs of living.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomin...

csomar3• 15 years ago

There is something that I'm missing. World Bank says that India GDP is $1.377 trillion, Wikipedia too.

But there is this "PPP" thing, which turns India GDP to $4 trillion. Which one is more relevant in this case?

adamt• 15 years ago

The PPP figure is irrelevant in this case. Purchasing Power Parity GDP figures adjusts the GDP to the cost of living. It has most contextual value when comparing the GDP per capita. PPP GDP per Capita is effectively a metric of the mean wealth relative to cost of living in the country.

To compare total GDP figures on a PPP basis for two countries, and when one country has 10x as many people doesn't really make sense.

What this comparison says is:

(Total GDP of Japan/Cost of Living in Japan) < (Total GDP of India/Cost of Living in India).

The Japanese economy is still 3x bigger (in terms of total GDP), and has 10x higher PPP GDP per capita, or about 30x the GDP per capita.

train_robber3• 15 years ago

To put it really simplistically : From the perspective of everything within India - PPP is what matters; because it takes into consideration the cost of living. But from the perspective of everything outside India - the absolute figure is what matters.

ashishgandhi9• 15 years ago

PPP is only relevant if your typical purchase is similar to that of the basket of goods used to calculate PPP. An iPod or a Toyota will still cost the same - irrespective of PPP - since they are global goods. (In fact due to India's laws they become much costlier in India with around ~30% increase if you convert money.)

csomar3• 15 years ago

If we are talking of things from the perspective within India, then it doesn't make sense to compare to Japan? If I'm comparing to Japan, then I'm going outside and I should use the nominal GDP, right?

notahacker• 15 years ago

PPP (Purchasing Power Parity) is a measure which adjusts the $1.377 trillion for what you can actually buy in India with those US dollars.

It's calculated based on prices paid in India and in Japan or the goods needed to live on; for this reason it's most useful as a measure when looking at per capita incomes to see what a typical person's share of adjusted GDP will buy them. PPP adjusting in theory shows that an Indian in India can enjoy the lifestyle of someone earning three times as much in Japan (provided he buys Indian goods at Indian prices). On the other hand, as soon as you start looking at GDP per capita [adjusted or not] it becomes obvious that Japanese people are on average much, much richer than Indians because Japan's similar level national income is shared between far fewer people.

As an aggregate measure of the economic output PPP adjusted GDP is not entirely useless either as a crude adjustment for labour costs: India can build a lot more skyscrapers for $1.377 trillion (or $1 billion) than Japan could and Indian output is arguably undervalued by raw GDP measures which simply looking at the prices paid. But effectively it's saying that India as a country produces more value than Japan if people were prepared to buy Indian goods at their Japanese value. As there's plenty of opportunity for trade between India and Japan, it's probably fair to say that Indian output probably isn't worth three times it's Indian value to the Japanese, otherwise they'd be buying it all up. Therefore the true value of India's economic output lies somewhere between the $1.4bn at low Indian domestic prices and $4bn at inflated Japanese domestic prices (trade isn't perfectly efficient), still behind Japan.

onemoreact• 15 years ago

PPP tends to undervalue infrastructure as it ignores things like subway system when comparing the cost of two condos. Unfortunately it's really hard to value infrastructure as a farmhouse can gain a lot of value from a bridge built 40 miles away. Still, at some level a house is a house is a house even if it’s in a ghetto.

HSO• 15 years ago

terrible headline. my dictionary says:

to topple: verb [ no obj. ] overbalance or become unsteady and fall slowly [ with obj. ] cause to fall in such a way

india rising does not cause japan to fall, in any way.

also, there's a certain triumphalism in such headlines that is, i contend, unworthy of a confident nation and of HN.

last but not least, the measure used is highly flawed, given that the headline seems to aim at india's rising "standing" in world affairs. when you do that, the actual exchange rate counts, not PPP. and there, the picture looks a little different.

just to be clear: none of which is to detract from india's great progress in the last 10 or 20 years, or from its talented population. it's just that this article/headline strikes me as cheap.

sassyboy• 15 years ago

That sort of sensationalist headline is expected from the indiatimes group.

pnathan2• 15 years ago

And what media groups are reputable in India?

ashishgandhi9• 15 years ago

India to finally (hopefully) "topple" war-troublled Iraq as the world's 128th country in terms of income per capita by purchasing power parity. (http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_...)

Or Mongolia for the 133rd position, depends upon who's list you look at.

Don't forget the huge income inequality.

jagira• 15 years ago

Per capita income is extremely low in India. But things are improving.

India's growth is mainly because of growth of service industry, manufacturing and modern agriculture techniques. The countries that you have mentioned have higher per capita income because of huge natural resources and less population.

Iraq -> Huge Oil reserves / Small population

Mongolia -> Huge mineral resources / tiny population

ashishgandhi9• 15 years ago

The countries I mention here are because they are directly above India on that list.

I'm hoping you are not trying to say you need a lot of natural resources and less population to be rich.

Singapore -> Almost no resources, pretty dense population. Singapore is much much ahead.

thewisedude3• 15 years ago

OK...like many countries with big population...there is significant income inequality. 400 of the richest americans have more wealth than 150 million americans. Getting back to your point -> So how should that affect the fact that India is about to be the 3rd largest economy?

brainless• 15 years ago

Sitting in India, and looking at that headline makes me feel journalism is absolutely wrong here, or at least in India Times.

There is no doubt India will become one of the richest economies, but right now we have so many problems we must fix. This headline gives the illusion that everything is just about perfect.

thewisedude3• 15 years ago

There will always be problems. You think USA does not have significant problems ? You think Europe does not have significant problems?

I dont think any country at any time was "perfect" and I dont think the headline is conveying that in any form

dr_2• 15 years ago

I'm not sure what it means to be a large economy anymore. If you roam around any of the cities in India, you see nothing but a third world nation, with rampant poverty and horrific infrastructure. And of course in the villages, it's even worse. And businesses apparently have had difficulty dealing with the corruption in the Indian government.

The country has such a long way to go before it can stand on the same footing as the US or even some of the European countries whose economies it is supposedly surpassing.

josefresco• 15 years ago

From what I read you're accurate. You could also make the argument that you could replace the word "India" with "China" and not be too far off in describing another huge economy.

dr_2• 15 years ago

This may be true on the outskirts, but in the cities, China has made huge advances, especially with infrastructure, roads, railway, etc. Of course, this is not true for all of China.

chailatte• 15 years ago

I don't think you've been to either country.

wmoxam• 15 years ago

There are huge differences between the two. China has far, far better infrastructure for starters, and the amount of absolute poverty is far lower in China.

jswinghammer• 15 years ago

India has structural problems in its' economy that will inhibit its' growth going forward. Japan has been stagnating for decades now and has shown no signs that they've figured out what the problem is. They've become the most indebted industrialized nation in the world paying for stimulus after stimulus while at the same time the Keynesians are telling them they haven't done anything to stimulate the economy.

nuncanada• 15 years ago

Ohh modern economy... It's fun when Nobel prizes go for those that insist in doing what is clearly not working... And just some weeks ago, a notorious Japanese economist says in a interview they figured out how to deal with the stagnation.... (Permanent stimulus!)... Don't they think the japanese are ever going to retire and need a large chunk of this money borrowed to the government? Without positive demographics it's impossible to keep postponing the balance sheet correction forever...

kyle221• 15 years ago

GDP and GDP/capita are two different things

ashishgandhi9• 15 years ago

I grew up in India. I can confirm whatever you said is true and is a euphemism. Few people talk about the poverty in India (it is almost similar to quite a bit of Africa) and how India was a socialist country where you required license to conduct almost any business. But even fewer people talk about how, culturally speaking, seniority has always been more important than the merits of what is being said and the fact how in practice everything - the law, police services, elections, etc. - falls under the government and aren't independent bodies. The main ruling party for most of history (called Congress) has always been run by one family alone. Nepotism?

michaelchisari3• 15 years ago

a socialist country where you required license to conduct almost any business.

How is that different from the U.S.?

AndrewDucker• 15 years ago

Large doesn't necessarily mean a lot for standard of living, because India's population is also very large, so the amount of economy per person is a lot smaller.

India's GDP might make it 4th (by Purchasing Power Parity) or 10th (nominally), but per person it's down at 129th.

(Figures via: http://en.wikipedia.org/wiki/Economy_of_India and http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP... )

byw• 15 years ago

Usually when they refer to the size of the economy they imply the leverage it has on the world stage because of its collective wealth.

From the average individual's perspective, it's more about per capita GDP.

americandesi333• 15 years ago

The problem is in the distribution of wealth. The nation is growing at 7-8% a year compared to 0-2% growth in US, but most of the wealth in India is in the hands of 5% of the population. The middle class is slowly growing, but not at the rate to close the disparity.

Democracy in its core is the reason for the slow infrastructure, government and social reforms because its like moving a big elephant. China on the other hand is able to be quite nimble with communism. Its interesting. I dont advocate communism because it sounds great in theory but rarely works practically, but it is working for China.

yummyfajitas3• 15 years ago

India doesn't have as much inequality as you think. Their Gini index is very middle of the road at 36% (comparable to Switzerland and Spain).

http://en.wikipedia.org/wiki/List_of_countries_by_income_equ...

5l• 15 years ago

I think the word you're looking for is totalitarianism, not communism.

ashishgandhi9• 15 years ago

China's growth comes from following capitalistic free market policies which are not communist in nature. (http://www.google.com/search?q=capitalism+in+china)

Moreover, I remember listening to one of The Economist podcasts where someone had done audited Chinese firms more strictly where they don't write off the cheap (free) land government provides, or other give aways. Turns out on a whole Chinese firms are destroyers of capital and not creators. Crudely speaking, they take land and convert it to output X. The value of X tends to be lower than the value of the land.

rohitkumar• 15 years ago

I agree. The term 'large economy,' when applied to the average person is an irrelevant term. For the average billionaire it means something, but to the average person (in our case, the average internet/mobile user) it means nothing. These old economic indicators do not measure the actual economic conditions in localities. Local economies have to be robust - that's the true sign of a progress.

amolsarva2• 15 years ago

One point many commenters are missing.

Yes the country is plainly less rich than Japan and the first world, and it shows in big cities. Even comparing big cities in China to India there is a big gap.

But here is what you are missing: as total wealth in India is growing there are indeed some places (which the casual tourist driving around will not see) centered in Mumbai, Bangalore, Delhi that are super rich. One way to spy on it is visit one of the "five star" hotels like JW Marriots etc -- they are numerous, massive, and full of quite rich people with loads of servants and fancy places to live.

By the way, you can find loads of disgustingly miserable poor places in the rich USA too. Maybe they all have sewers and electricity but that's about all that separates parts of the rural US (deep south) or bad urban poverty (right nearby me in NYC) and some villages in India.

byoung24• 15 years ago

Even the poorest place in the US has access to electricity, clean water, sewage disposal, trash disposal, law enforcement, emergency response, phone service, broadcast television, postal service, and the list goes on. This is definitely not true in India or China, and there is a long way to go before they reach that level.

amolsarva2• 15 years ago

You are right about most of that being available in the US (except emergency response - but I don't know how quickly you will get rescued in rural US places, or even parts of NYC if you read the papers)

But you are wrong about most of this not being available in most places in India. Maybe sewage isn't great and emergency response sucks, and phone is wireless not landline. But there is definitely postal service and TV! You must be kidding.

But the main point --> a few bits of infrastructure like what you list does not make people happy, comfortable or rich. You can be very poor and miserable here in the US and many millions of people would be much better off if they lived in Mumbai, where at least stuff is cheaper to buy

jesseendahl• 15 years ago

It's not quite true that the poorest areas of the U.S have access to those things. Check out these two links about colonias:

http://journalism.berkeley.edu/projects/border/elpasocolonia... http://www.sos.state.tx.us/border/colonias/faqs.shtml

And two New York Times articles from July:

http://www.nytimes.com/2011/07/08/us/08ttconditions.html http://www.nytimes.com/2011/07/10/us/10tthealth.html

yummyfajitas3• 15 years ago

Please, just stop. You have no clue. I've lived most of my life in poor parts of the US. Now I live in a posh area of Pune and jog through slums fairly regularly. There is no comparison.

Just one stat for comparison. In the US, 70% of poor people own a car, and 25% own two cars. In India, 1.5% (as of 2006, it's probably more like 2-3% now) of all people have a car, and marginally more own a scooter.

http://www.census.gov/prod/2008pubs/h150-07.pdf

http://en.wikipedia.org/wiki/List_of_countries_by_vehicles_p...

The 5'th percentile in the US is richer than the 95'th percentile of India.

http://economix.blogs.nytimes.com/2011/01/31/the-haves-and-t...

beachgeek3• 15 years ago

This is one of my favorite topics, discussing poverty in India and the US.

In India (maybe every developing country), as you mentioned, poverty is lack of stuff. You literally don't have enough to eat.

In US (maybe every developed country), poverty is the lack of HOPE.

Its very very weird. I cannot understand why some "poor" person in USA feels poor when they get to eat, have shelter, drive a car, get to rant at their Congressman/woman etc.

kalid• 15 years ago

In the USA, poverty leads to obesity. In India, poverty leads to starvation. There's a huge difference when a government's concern for the poor is getting them to eat "healthier".

Have you ever seen a desperately thin homeless person in the US?

billswift• 15 years ago

Yes I have, but that is because many (probably most) of the homeless in the US are alcoholics or suffering some mental disorder, which often causes bad nutrition - from lack of appetite to self-starvation. More to your point, I think, I have also seen seriously overweight ones too.

dramaticus3• 15 years ago

From the paper that brought you

http://articles.timesofindia.indiatimes.com/2010-10-28/man-w...

Should a woman marry her rapist?

KALPANA SHARMA, Oct 28, 2010, 12.00am IST

When a rapist offers to marry the victim, one would think it's the perfect solution. But isn't this victimization of the victim all over again?

dimmuborgir• 15 years ago

Wow lot of pessimism and cynicism here.

> '...but per-capita income of India is so low'

No one has said otherwise. Having a big economy has many advantages and India is expected to grow for decades to come.

> '...but go to Indian cities and you'll see rampant poverty'

So? Poor people migrate to cities in search of opportunities. Unlike China there is no mechanism in India to put restrictions on rural migrants.

> '...gap between rich and poor in India is growing'

Show me one country that is growing 5% or more where the gap between rich and poor is decreasing.

rrrazdan• 15 years ago

I see lots of comments about income inequality in India. I find them very amusing. Refer http://en.wikipedia.org/wiki/List_of_countries_by_income_equ.... You would see that India's income inequality is less than Switzerland, France and the Netherlands. The pressing problem in India right now is not income inequality. Its the lack of income, really. At this stage of development all India should worry about is earning wealth. Trying to redistribute that is a 'premature optimization'. :)

jisaacstone• 15 years ago

This is an oversimplified perspective, though it does have some underlying truth. The issue of poverty reduction is a complex one. I reccomend anyone truly interested to read this World Bank comparison report from a couple years ago(pdf):

http://elibrary.worldbank.org/deliver/5080.pdf?itemId=/conte...

It is excellent.

And here is the thrilling conclusion:

“China clearly scores well on the pro-poor growth side of the card, but neither Brazil nor India do; in Brazil’s case for lack of growth and in India’s case for lack of poverty-reducing growth. Brazil scores well on the social policies side, but China and India do not; in China’s case progress has been slow in implementing new social policies more relevant to the new market economy (despite historical advantages in this area, inherited from the past regime) and in India’s case the bigger problems are the extent of capture of the many existing policies by non-poor groups and the weak capabilities of the state for delivering better basic public services.”

prakashk• 15 years ago

> At this stage of development all India should worry about is earning wealth. Trying to redistribute that is a 'premature optimization'. :)

When do you think is the Right Time to start that "optimization"?

tsotha2• 15 years ago

Never. Why would you assume it's the government's role to decide who has what?

hristov• 15 years ago

Not true. If you look at the GINI index (which is probably the most accurate measure for high inequality) India is quite higher than all those countries. And almost every country higher than India has significant economic problems. The only exception is Hong Kong and that is because its income inequality is obviously caused by capital flight from mainland China.

The other indexes do not capture the true nature if income inequality in these modern times. Comparing the top 10% of income earners with the bottom 10% washes things out because the truly rich are a very small group. They are a mere fraction of the top 1%.

chakde5• 15 years ago

Well comparing GINI across similar sized countries: India (36.8), Russia (39.9), US (40.8), China (46.9), Brazil (49.3), India is the lowest of the group.

While its true that most european countries have slightly lower GINI, they also have a higher 10% ratio (highest to lowest) than India.

So it's pretty hard to argue from the actual statistics that inequality is the outstanding problem of India as it is often made out to be.

But it's perhaps true that the contrast is more visible in India than elsewhere - with slums next to high rises.

I think the reason for this is that growth is relatively narrowly focussed around a few metros, which then attracts a big influx of job seeking rural population. The other big countries never had such a big rural population to begin with.

aita• 15 years ago

I wonder how people of india are so happy when compared to developed nations.

http://en.wikipedia.org/wiki/Happy_Planet_Index

openforce• 15 years ago

Thats a different dimension. Happiness isn't related to the economy. People seldom realize this.

The culture and workings of the society, the low benchmarks for satisfaction and happiness is what keeps them happy.

The huge number of festivities also plays a part. :)

jquery3• 15 years ago

HPI = (Self-reported happiness + Life Expectancy) / (Eco-footprint) ?

Yeah, no. The HPI is not a measure of the happiness of a nation, it's a measure of self-reported happiness per unit of "imposition on nature." And according to that index, we should all strive to be like the Dominican Republic, Vietnam, Columbia, and Cuba. No thanks.

chakde5• 15 years ago

Sustainability and environment count for something. Perhaps a lot. Self-reported happiness obviously counts for a lot.

GDP does'nt take any of that into account.

chakde5• 15 years ago

This is quite true and surprising. A european once mentioned that one problem is too many fat people in the "developed countries".

See the distribution of worldwide obesity here - http://wiki.medpedia.com/Image:World_map_of_Male_Obesity,_20...

and

http://www.healthyfellow.com/241/weight-loss-news

Probabaly from driving cars and watching too much tv and computers.

cottonseed• 15 years ago

I think per-capita GDP is much more interesting than total GDP. Japan: 34k/yr, India: 3k/yr (source: wikipedia).

pixpox30• 15 years ago

Triumphalism without much actual substance. The Japanese have an amazing standard of living, superb infrastructure, world beating products and awesome tech.

If you wander around a big city in India you'll see wild dogs and malnourished children, enormous shanty towns and slums. How this nationalistic rag called the india times can proclaim "victory" as having "toppled" Japan is beyond me.

Also - claiming that Russia and India are coming to the aid of European countries is completely ridiculous. India currently receives £1billion + in aid from the UK.

Having a "big" economy because there are 1 billion citizens within that economy doesn't mean anything in itself.

digamber_kamat2• 15 years ago

All this "large economy" chest beating is useless if you cant prevent a million deaths because of malnourishment.

India to topple Japan as world's 3rd-largest economy

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