India Driving On All Cylinders

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    The economy of India is driving on all cylinders, says Atul Penkar, fund manager, offshore, at Birla Sun Life Asset Management. Speaking at Excel Investment Counsel’s ‘Investment Opportunities in the New India,’ he compared India to Canada in a number of areas. Its GDP is $2.1 trillion, slightly more than Canada’s $1.8 trillion. However, its GDP is growing 7.8 per cent annually against Canada’s 1.7 per cent growth. And while Canada’s middle class is expected to grow from 10 million today to 12 million by 2030, India’s middle class is expected to jump from 100 million today to 475 million by then. One of the drivers of this is the fact the average age in India today is 27, 15 years younger than the average 42-year-old Canadian. These are part of the reason that consumption drives 70 per cent of India’s GDP growth. And it is facing few risks. A sharp rebound in oil prices back to $100 a barrel would be a risk as India’s economy is benefiting from the low price of oil with the government directing savings from oil into infrastructure like new small cities to ease the population burden in existing cities. As well, it is not immune to global events like 2008. Its economy would feel an impact, Finally, government reform could cause problems. It is currently going well, but if it can’t continue these reforms, then expectations of GDP growth might come off a bit.