India is staged to surpass China in every key factor that relates to economic growth. As China’s economy slows, it is predicted that India is ready to explode onto the world stage as the largest economy through a period of vigorous population growth and market expansion. Here are five reasons why India is the next China.
- Gross Domestic Product (GDP)
India’s GDP has reached an unprecedented 7.9% expansion in the first three months of this year. It has exceeded market expectations that projected a 7.5% increase. This is a more than 2% expansion over the nation’s growth in 2015’s last quarter. In 2013, India lagged behind China’s 7.7% GDP growth by 2.7% percent. However, three years later, not only has India caught up to China, India has surpassed China. So far, in 2016, China’s GDP has only experienced growth of about 6.9%, its weakest performance since 1990. And experts predict that China’s economy will continue to contract.
As once the official second most populous country globally, with more than 1.3 billion people, India has now caught up with China’s population. This can be attributed to China’s strict control of birth rates. In 2013 China’s birth rate, according to the United Nations, was 1.7 children per Chinese woman. Even by ending their standard control of one child per Chinese family, experts do not expect this policy change to make a significant difference in China’s birthrate until around 2050.
Compare the UN’s birth rate data for China to India’s average birth rate of 2.5 children per Indian woman in 2013. Experts predict a population explosion that will result in India officially being the most populated country in the world. This translates into incredible economic growth as India is expected to have a population by 2020 that includes about 900 million adults of working age.
- Middle Class Consumer Spending
A large working class means a large consumer class. Middle class spending comparisons show that India is not only outgrowing China, but also outspending the Chinese as well. In 2016 economists expect China’s middle class to grow to about 340 million. This number will represent more than half of all Chinese households with the purchasing power of disposable income.
However, on the flip side, India’s middle class is expected to surpass even the spending capabilities of China’s burgeoning middle class. With more than 1 billion people counted within India’s middle class, it is easy to see that with more than 600 million more Indian consumers than Chinese, India is the market businesses need to reach.
Simple comparisons of real-time population demographics and economic indicators tell the India versus China story:
- China = 1,379,097,313
- India = 1,328,455,179
Births (2016 thus far)
- China = 9,243,720
- India = 14,391,183
Population Growth (2016 thus far)
- China = 3,959,485
- India = 8,877,297
- China = $10 trillion
- India = $2 trillion
GDP Forecast (2016)
- China = 4% or $400 billion
- India = 7.5% or $150 billion
According to the overall 2016 GDP forecast, it seems as if China will experience the largest growth. However, what the numbers do not reflect is robustness. China’s growth and economy is slowing while India’s is rapidly expanding and growing. This will affect the key economic factor of interest rates.
- Interest Rates
Economic experts expect India’s interest rate to stabilize at about 6.5% in 2016 and gradually trend downward toward a projected 4.75% by 2020. On the other end of the spectrum is China’s expected 2016 interest rate to be about 4.10% and trend upward to about 6% by 2020.
For India, a trend toward lower interest rates is good news. Companies will find it easier to borrow capital and grow their businesses. Consumers will experience lower interest rates for financing large purchases. All of these population and economic factors spell out clearly that India is the next China when it comes to investing for growth and opportunity.
Invest In India
Savvy investors today are looking forward to the India of tomorrow. By engaging in opportunity in India, businesses can help to shape India’s story of becoming the world’s largest economy. Whether it is property, investment, education, or philanthropy, India is the place to be if investors are interested in leading the world into the future.