Outdone only by China, India has been the second fastest-growing country during the past 15 years. So why is India home to 40% of the world's poor?
India will become the fastest-growing of the world's major economies over the next 50 years.
This according to a Goldman Sachs study, among other findings cited by Fareed Zakaria of Newsweek.
Many Indian companies are growing at impressive rates, with annual gains ranging from 15% to 25%.
Yet more than 300 million people in India live on less than $1 a day, with 500 million others earning less than $2. About half of female Indians are illiterate. India also has the world's second largest HIV population.
These facts reflect just how polarized India is. Highly educated entrepreneurs fuel a world-class economic boom in sharp contrast to the destitute masses at the other end of the spectrum.
Although India's rising middle class is young and not expected to age as fast as those in other countries, this is not the central reason for India's seemingly chaotic distribution of wealth.
India is noted for its burdensome bureaucracy that complicates initiatives for foreign investment. Unlike the top-down governments of Beijing and Shanghai, India's government does not have the formal structures and powers necessary to both nurture and control international trade.
Or to be blunt, India's ruling body is corrupt. Nearly 20% of Indian Parliament have been accused of crimes such as embezzlement, rape and murder.
Organized parliamentary groups include landowners, farmers, government unions and local thugs who plunder state coffers to stay richer than their countrymen.
And The Winners Are...
India's diversity offers hope. Growth on the international stage is fueled by homegrown entrepreneurs who overcome obstacles and bypass bureaucracy by virtue of hard-won education and skills. Entrepreneurs are positioned to benefit from any upturn in India's economy. And it's this bottoms-up growth that appears to be so chaotic to many observers.
As any regular CNN viewer could tell you, India continues to be a major beneficiary of outsourcing particularly from American companies. Outsourced products and services range from Indian auto-parts factories to call centers which siphon jobs from the U.S. but also improve the profitability of American companies.
Indian companies like the Tata Group are showcases for India's success in global trade. Tata's revenues grew from US$17 billion in 2004 to $24 billion. The conglomerate's business activities are conducted through 93 companies operating in seven business sectors: communications & information systems (27%); engineering (24%); materials (19%); energy (9%); services (8%); consumer products (8%); and chemicals (5%). Tata has a presence in six continents and holds leadership positions in many industry segments, among them tea, software, automobiles, energy and hospitality.
Sources: www.tata.com, Newsweek March 6, 2006 edition
Claymore Investments includes China in its recently launched Brazil-Russia-India-China (BRIC) Exchange Traded Fund. The percentage of the BRIC ETF's investment in India is a respectable 14%, with comparable percentages diversified into Brazil (48%), China (33%) and Russia (5%).
