‘India could overtake China in 15 yrs’

The third Bric (Brazil, Russia, India and China) report by Goldman Sachs, projected that the share of the four nations in world growth could...

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The third Bric (Brazil, Russia, India and China) report by Goldman Sachs, projected that the share of the four nations in world growth could double from 20 per cent in 2003 to 40 per cent, in 2025. In fact, industrialisation in India and China could push the world growth rate to above 4 per cent over the next few years.

The report, published a week ago, points out that in the three big areas of market development: energy and oil, cars and market capitalisation, Bric have the potential to be a major source of growth within 10 years and perhaps a dominant one within 20. In the next decade, Bric will have a major impact on the oil and energy markets, which clearly are the pressure points for growth.

Bric will emerge as big consumer markets in the next phase to be followed by their prominence in the capital markets, where there could be a lag, the report states.

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In the next three years itself, the number of people with incomes over $3,000 (middle class) could double and touch 800 million in a decade, which is higher than the combined population of the US, Western Europe and Japan. In India, the middle class is expected to increase 14 times in the next 10 years, compared to 10 times in China. By 2025, Bric could have over 200 million people with incomes of over $15,000.

As far as global oil demand is concerned, China’s contribution would remain high, but is likely to peak in 5-10 years and would decline steadily thereafter. India’s impact will become gradually more important and its contribution to global demand growth could overtake China’s in 15 years.

Further, India’s share of actual oil demand could nearly double and will gradually converge on China’s by 2025. China and India together will then account for almost one-third of the global oil demand. Russia’s demand too will double by 2025 and is on a path to remaining by far the largest per capita oil consumer amongst Bric.

	Pointers to the future

			• Indian middle class is expected to increase 14 times in next 10 years, compared to 10 times in China • India’s share of actual oil demand could double gradually converging on China’s by 2025 • India’s growth in car ownership expected to be slower than China’s over next few years • In next 10 years, market capitalisation of Bric economies could quadruple to $4 trillion, with China and India accounting for 60 per cent

India’s growth in car ownership is expected to be slower than China’s over the next few years. While India has the potential for a three-fold increase in car ownership over the next 10 years, China can achieve the same in the next three years. China and India may emerge as the world’s number one and two car markets, with the former overtaking the US within 20 years.

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Bric’s importance to global equity markets would rise from a paltry 3.5 per cent now, to around 10 per cent by 2020. In the next 10 years, market capitalisation of Bric economies could quadraple to $4 trillion, with China and India accounting for 60 per cent of the total.