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Delhi Wine Club

Posted: Tuesday, November 17 2009. 10:42

Indian Economy to double in Five Years

In what appears to be a highly optimistic report, India is expected to be a $2-trillion economy in the next five years as its GDP growth is likely to average at 12 per cent in nominal terms powered by a surge in demand by the consumers, according to a study by the brokerage house, Enam Securities

India's GDP is likely to grow at an average 12 per cent in nominal terms. Hence, India will be a $2-trillion economy by 2014-15," Enam Securities Head-Research, Nandan Chakraborty, and economist Sachchidanand Shukla said in a report titled 'India Strategy' released yesterday.

While a growth of this magnitude will auger extremely well for the wine industry, it is unclear how the various parameters have been considered in the model. The economy has not breached the 10% mark so far. To expect a continuous growth at 12% seems to be highly onerous task. It would be interesting to note comments from the government sources.

According to the report in Economic Times today, this growth will be led by the huge consumption demand in sectors like FMCG, power, auto because of small car hub, IT and pharmaceutical companies..

The brokerage firm said insurance companies, financial services and equity markets will flourish as the country's annual savings pool grows to $700 billion from $400 billion at present.

"More than half of this ($700 billion) could flow into financial savings. With favourable demographics and average seven per cent real growth, India can sustain more than 30 per cent savings rate akin to the Asian tigers, or China and Japan. This will transform the domestic financial services space," Enam said.

Life insurance penetration in India, which is already a USD one-trillion economy, is estimated to reach a level of 4.4 per cent over the next two years as insurance companies focus on expanding into rural India, the report said.

Meanwhile, the members of CII’s National Council, at a meeting held in Mumbai last  Friday, felt that demand is picking up across sectors and the economy  and according to the CEOs snap poll conducted at the meeting, over 70% of members felt that GDP growth will exceed 6% in 2009-10.

The Centre for Monitoring Indian Economy and DSP Merrill Lynch yesterday scaled up GDP growth projections to 6.2 per cent this fiscal year ending March 2010.


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