Getting the Indian economy back to 9% growth

Dr Samiran Chakraborty talks economics at the Elite Conference

119
the chief economist of Citibank in India

A presentation by Dr Samiran Chakraborty, the chief economist of Citibank in India, at the Elite Conference 2017 in Mumbai in September was particularly interesting for those of us who eye the Indian economy as full of both potential and numerous day-to-day challenges. Although Dr Chakraborty’s excellent presentation was from a high-level view, it is imperative for us to try to relate the data available on flexible packaging and consumption growth to the packaging industry.

At times the continuous capacity creation in the packaging and label industry which feeds hypercompetition seems to defy the reality on the ground but Dr Chakraborty’s presentation indicated that there might be some method in the seeming entrepreneurial madness that surrounds us. On the other hand, key policy issues that he mentioned such as the need for job creation and vocational education are extremely big challenges since 28% of the global workforce in the next 10 years will come from India. As he said, “The kind of demographic dividend that India currently enjoys happens to a country only once in a lifetime.” While his presentation focussed on the need to get from 7% to 9% growth in the next five to ten years, which would bring inflection in the curve, he also warned that the economy could ‘stall speed’ if the right policy decisions are not made to accelerate it out of the current slowdown. “Inflection is 7 to 9% growth over the next five to ten years. If the right kind of decisions are not taken, we could have a slowing down. The right policy decisions are needed to avoid stall speeds,” he said.

Dr Chakraborty in my view made a very balanced assessment of Indian economic growth and his approach is useful in assessing both the likelihood of an upturn and what we need to do in order to make it happen. He prefaced his presentation by talking about the current slowdown, which he indicated is a kind of growing pain brought on by several necessary reform measures such as GST and the formalization of the economy by linking personal data and demonetization. He said that while the economy had been growing at 8%, he did sense a bit of unease in the past year where it went down to 7% and even lower. “From 2004 to 2008, the economy consistently recorded 9% growth and above. How do we get from 7% to 9%? How do we get these 200 basis points of growth back?” he asked.

What drives growth?

As a historical background, Dr. Chakraborty pointed out that from 1975 onwards, the country has consistently outgrown other emerging markets except perhaps China, which it is tracking with about a 10 year lag. China’s per capita income is currently 4.5 times that of India’s. He pointed out that while China’s growth has been largely investment and infrastructure driven, the growth in India has been driven by consumption and services where China lags.

It took India 36 years to move from US$100 to US$ 500 in per capita income. Then 5 years more took us from US$ 500 to US$ 1000 in per capita income. Yet another 5 years took us from US$ 1000 to US$ 1500 in per capita income. This is what can be described as inflection in growth. However, in the past 5 years, we have not achieved the delta of US$500 that we should have.

Dr. Chakraborty explained that the income dynamics of the past 10 to 15 years indicate that not only is total consumption increasing but so is the quality of consumption. The rapid growth of middle class income over the last 10 to 15 years has meant that the middle class has reached 170 to 200 million and in some time will touch the 400 to 500 million people mark.

“Of the four key agents of growth, investment, exports, credit and consumption, in the 2000s all four were firing in India. However, from 2010 onwards only consumption is rising while the other three engines have come down substantially. If India is to get back on the 9% track, we have to get the other three engines firing. On consumption, we are doing perfectly well but on the other three we need to improve,” he said.
Naresh Khanna editor@ippgroup.in

The impact, resilience, and growth of responsible packaging in a wide region are daily chronicled by Packaging South Asia.

A multi-channel B2B publication and digital platform such as Packaging South Asia.is always aware of the prospect of new beginnings and renewal. Its 16-year-old print monthly, based in New Delhi, India has demonstrated its commitment to progress and growth. The Indian and Asian packaging industries have shown resilience in the face of ongoing challenges over the past three years.

As we present our publishing plan for 2023, India’s real GDP growth for the financial year ending 31 March 2023 will reach 6.3%. Packaging industry growth has exceeded GDP growth even when allowing for inflation in the past three years.

The capacity for flexible film manufacturing in India increased by 33% over the past three years. With orders in place, we expect another 33% capacity addition from 2023 to 2025. Capacities in monocartons, corrugation, aseptic liquid packaging, and labels have grown similarly. The numbers are positive for most of the economies in the region – our platform increasingly reaches and influences these.

Even given the disruptions of supply chains, raw material prices, and the challenge of responsible and sustainable packaging, packaging in all its creative forms and purposes has significant headroom to grow in India and Asia. Our context and coverage engulf the entire packaging supply chain – from concept to shelf and further – to waste collection and recycling. We target brand owners, product managers, raw material suppliers, packaging designers and converters, and recyclers.

In an admittedly fragmented and textured terrain, this is the right time to plan your participation and marketing support communication – in our impactful and highly targeted business platform. Tell us what you need. Speak and write to our editorial and advertising teams! For advertisement ads1@ippgroup.in , for editorial info@ippgroup.in and for subscriptions subscription@ippgroup.in

– Naresh Khanna

Subscribe Now
Previous articleMigration and toxicology
Next articleRecently launched label printer XLP 506 on display
Editor of Indian Printer and Publisher since 1979 and Packaging South Asia since 2007. Trained as an offset printer and IBM 360 computer programmer. Active in the movement to implement Indian scripts for computer-aided typesetting. Worked as a consultant and trainer to the Indian print and newspaper industry. Visiting faculty of IDC at IIT Powai in the 1990s. Also founder of IPP Services, Training and Research and has worked as its principal industry researcher since 1999. Author of book: Miracle of Indian Democracy.

LEAVE A REPLY

Please enter your comment!
Please enter your name here