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India is Catching Up With China
When I first visited Calcutta in 1976, 800,000 people were sleeping on the sidewalks, I was hauled everywhere by a very lean, barefoot rickshaw driver, and drinking the water out of a tap was tantamount to committing suicide. Some 34 years later, and the subcontinent is poised to overtake China’s white hot growth rate.
My friends at the International Monetary Fund just put out a report predicting that India will grow by 8.5% this year. While the country’s total GDP is only a quarter of China’s $5 trillion, its growth could exceed that in the Middle Kingdom as early as 2013. Many hedge funds believe that India will be the top growing major emerging market for the next 25 years, and are positioning themselves accordingly. Look at the country ETF’s, with India’s (INP) up 22% in 2010, compared to a lowly 4.5% for China’s (FXI).
India certainly has a lot of catching up to do. According to the World Bank, its per capita income is $3,275, compared to $6,800 in China and $46,400 in the US. This is with the two populations close, at 1.3 billion for China and 1.2 billion for India.
But India has a number of advantages that China lacks. To paraphrase hockey great, Wayne Gretzky, you want to aim not where the puck is, but where it’s going to be. The massive infrastructure projects that has powered much of Chinese growth for the past three decades, such as the Three Gorges dam, are missing in India. But financing and construction of huge transportation, power generation, water, and pollution control projects are underway.
A large network of private schools is boosting education levels, enabling the country to capitalize on its English language advantage. When planning the expansion of my own business, I was presented with the choice of hiring a website designer here for $60,000 a year, or in India for $5,000. That’s why booking a ticket on United Airlines or calling technical support at Dell Computer gets you someone in Bangalore.
India is also a huge winner on the demographic front, with one of the lowest ratios of social service demanding retirees in the world. China’s 30 year old “one child” policy is going to drive it into a wall in ten years, when the number of retirees starts to outnumber their children.
There is one more issue out there that few are talking about. The reform of the Chinese electoral process at the next People’s Congress in two years could lead to posturing and political instability which the markets could find unsettling. India is the world’s largest democracy, and much of its current prosperity can be traced to wide ranging deregulation and modernization than took place 20 years ago.
I have been a big fan of India for a long time, and not just because they constantly help me fix my computers. In August, I recommended Tata Motors (TTM), and it has gone up in a straight line since, rising 38%, instantly making it one of my top picks of the year (click here for “Take Tata Motors Out for a Spin” at http://www.madhedgefundtrader.com/august-30-2010-4.html ). On the next decent dip take a look at the Indian ETF’s (INP), (PIN), and (EPI).
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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Some pics of India:
[Warning!!! Graphic Photos!!!]
http://www.chinasmack.com/2010/pictures/filthy-india-photos-chinese-netizen-reactions.html
Wow, nice place. That's a new hygiene technique that I never considered. thx.
@savara
do whatever you want.. its free country.. its not INDIA...
another nice feature of your country: SLAVERY, CHILD PROSTUITION, ETC,
http://gvnet.com/humantrafficking/India.htm
alx
here's the chart you need: Dell's US workforce for the last twenty years vs. Dell's Indian workforce growth.
Along with energy importation, India excels at importing the middle class lifestyle once enjoyed in the US.
Interesting. But:
"To see the data, charts, and graphs that support this research piece etc..."
How come these are never actually available?
Nice article thanks.
India's growth rate is impressive, its coming from the changes in the lives of poor people, but they still have a long way to go. I would not compare them with China yet. Every country has their own course. I agree ,one can make money out of this growth rate by investing in some blue chip indian stocks, but dont agree exporting service jobs outside, its not fair to see someone being jobless here because his job is exported ..
You know what was lacking in this "assessment?" ANY evidence of actually producing anything!
India's fucked just like every other net energy importer is fucked. And when you're not adding value to that imported energy, well...
This "assessment" also is based on past performance, that is, it's based on India's absorbtion of the US's exporting inflation (bubble mania), which has just about shot the wad.
The only thing India has going for it that I can think of is an enormous amount of cheap labor...It may be the world's biggest democracy, but it's crooked as a dog's hind leg. There may be no place on earth where so many live in squalor....This their 21st century: still poor sanitation and polluted drinking water for hundreds of thousands.....Don't they lack in most major natural resources? It's bad enough to ship call center jobs to India but sending $60K programming jobs there hurts....Don't forget, that guy making $60K here spent $80-$100K for his education.
@Tictock
dont bother... he's stupid old fuck...
for all who likes this "amazing" country
google 'hepatitis india', 'river gang dead bodies'
indians are FILTHY, DIRTY, POOR subhumans who literally reproduce ones alike on streets ..
alx
@alex,
I junked you.
Your's only
A Filthy, Dirty, Poor Subhuman :-)
They are disgusting subhumans. Someone should invent a way to convert them into some sort of fossil fuel so their utility would increase.
your name tells me all I need to know about you but you had to vomit your crap, didn't you? India was one of the two richest countries when we were colonised by the British who proceeded to beggar the land at an amazing pace and offshore all the jobs to England and to further their industry. now when we progress and you lose some of the jobs done there you are seething. You are a good reason why the west is in trouble-lazy, bigoted, trigger happy..a waste of space and time. if anything you need to be converted into fuel.
you are a fucking wanker, and in a just world you would have been born there instead.
You Brits love your Indians yea? Why, because they are your Mexicans. Near free, off the books, household labor. Watch the kids, mow the lawn, wash the crockery and I'll pay you $15 quid a month.
Fucking limey. We need fuel not offshore rats.
Umm... racist much?
Do the math paulie. India is not a race.
We need to overturn the offshore model that is enriching India and bankrupting America, this is based on the assumption that you care about America and are not some dipshit Brit.
The only way that country is growing is by exporting US dollars for service jobs that are rightfully US jobs.
The best way to do this is find a way to identify the value of the Indians. The only value that I have been able to identify is conversion to fossil fuel.
Do you have any other ideas?
I agree with your criticism of offshoring. But the Indians who take these jobs are not exactly living the high life.
You know who is living an unearned high life?
1) shareholders - 80% of equties are owned by the richest 5%
2) executives - cost reductions translate into higher bonuses
The reason that offshoring is such a common practice is that more of the value that they produce can be syphoned off by our overlords.
idiotic as ever..
# I was presented with the choice of hiring a website designer here for $60,000 a year, or #in India for $5,000.
sure its good.. lets ship all jobs abroad.. only problem asshole.. this unemployed web designer after sitting 99 weeks w/out job will buy gun and blow off brains of wife and kids in your favorite mall...
how's that scenario ?
alx
ps
cant believe still exist someone who is for offshoring jobs..
*cant believe still exist someone who is dont understand freemarket
Do you have any idea how pervasive corrupt practices are in India? It's politicians are thugs, ganglords - as in celebrated dons who move into politics! In China, if a senior official in the administration commits fraud, it's punishable by death. There is no reason to compare a chinese-run economy to an indian one. Seriously, you would take money out of a US-type economy to put it into an indian one?
Sorry Bro, China is rotten through and through with corruption. I could get into details but I prefer not in an open forum
Umm, I live in China. Officials are pretty effing corrupt here too. You don't remember all the schools that collapsed during the Sichuan earthquake? The only time senior officials get shot here is when they piss off other senior officials.
A friend of mine runs an export business out of xian. She spends more on bribes than she does on labor. Fail.
From a purely business angle, it's part of the total cost of doing business. If it's too high then one shouldn't be doing that business, right?
The corruption in the US is greater, it's just that it's so heavily polished that it give the appearance of legitimacy (also legalized corruption).
Umm. No. University graduates here want to work as civil servants because it's a license to steal. Corruption is expected and tolerated at every level of government.
Yeah certain areas of the US economy are corrupt, but it is not endemic and pervasive. Some americans still play fair.