4. Part I
Long term growth
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5. Drivers of long term trend GDP growth
Labour: A young demographic, with growing human capital.
Capital: Capital stock has grown steadily.
Productivity: Numerous micro-economic drivers of productivity.
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7. Quality and supply of labour
Quality
Year Literacy rate Years of schooling
1980 41 1.9
1990 48 3.0
2000 61 3.6
2010 69 4.4
2014 72.1 (estimated) 5.4
1 Source: Years of schooling UNDP, Human Development Report
2 Source: Literacy rate: World Development Indicators: Defined as percentage of population age 15 and above
who can, with understanding, read and write a short, simple statement on their everyday life.
Supply: The working age (15-64) population has been rising and is
currently at 65% of the population.
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8. Labour quality will improve
Rapid improvement in literacy
70 percent of the work force is literate.
10 percent workers are graduates.
In the next decade
1 Everyone entering the labour force will be literate.
2 20 percent of entrants to the work force will be graduates.
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9. Literacy will improve
1990 2000 2010 2020
5060708090100
Literacyrate(%)
All
Female
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10. More literate workers can follow written instructions
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11. High School educated will increase
1990 2000 2010 2020
510152025
Highschoolrate(%)
All
Female
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12. High end scientific and technical labour force
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13. Better health improves labour productivity
Health status of population has been improving.
Infant Mortality Rate (IMR) in India declined from 88 per 1000 live
births in 1990 to 39 in the year 2015.
Maternal Mortality Rate (MMR) has declined from 600 per 100,000
live births in 1990 to 174 in the year 2015.
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15. Comparing India’s growth in capital stock
Indexed to 100 in 1991, India outperforms its peers
1995 2000 2005 2010
5020010005000
Index
Growth in capital stock
India
Brazil
Great Britain
Japan
Mexico
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16. All projects under implementation
Value of projects under implementation has been rising
20
40
60
80
100
Rs.Trillion
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Apr−Jun 2017; 97.68
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17. Addition to capital stock: Gross fixed assets of all large
firms
100
200
500
1000
Billiondollars
Mar 1991 Mar 1997 Mar 2003 Mar 2009 Mar 2015
Mar 2016; 1063.83
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21. Urban transportation
Features 11 cities
1995 2000 2005 2010 2015 2020 2025
0
500
1000
1500
2000
Kilometeres
16.45
366.2
1965.46
2017−07−21
2002 to 2017: 350 km over 15 years: 23.3 km per year.
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22. A sense of the future
The outlook on capital, labour, productivity is positive.
Long term growth prospects are good.
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23. Can we be complacent?
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24. Part V
Current state of the economy
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26. Slowdown in industrial production
Year-on-year growth
02468
Y−o−Ychange(Percent)
Jun 2014 Jan 2015 Sep 2015 Apr 2016 Dec 2016 Jul 2017
May 2017; 1.72
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27. Slight uptick in net sales of firms, but still subdued
Year-on-year growth
0
5
10
15
20
25
Y−o−YGrowth(Percent)
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Jan−Mar 2017; 5.93
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28. Slide in bank credit to commercial sector
Year-on-year growth
5
10
15
20
25
30
35
Y−o−YChange(Percent)
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Jun 2017; 6.71
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30. Part VI
Will the investment cycle downturn affect
trend growth?
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31. Gross fixed capital formation
As a percent to GDP
2012−03−31 2013−03−31 2014−03−31 2015−03−31 2016−03−31 2017−03−31
PercenttoGDP
0
10
20
30
40
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32. Gross fixed capital formation
Year-on-year growth
2013−03−31 2014−03−31 2015−03−31 2016−03−31 2017−03−31
Percent
0
2
4
6
8
10
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33. Projects announced by private sector (Levels)
10
20
30
40
Rs.Trillion
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Apr−Jun 2017; 24.57
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34. Concerns
Tax rates and tax administration
Permissions, licenses, red tape
Law and order, courts, enforcement, corruption
Policy uncertainty
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35. Conclusion
India has good long term growth prospects.
There a currently a cyclical downturn in investment.
If the investment downturn persists, it can impact long term capital
stock and growth.
The policy framework for supporting investment needs to be
improved.
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