Getting the Indian economy back to 9% growth

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Getting the Indian economy back to 9% growth
Dr Samiran Chakraborty

A presentation by Dr Samiran Chakraborty, the chief economist of Citibank in India, at the recent Elite Conference 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, confirmed by a cash advance apps 2021 survey conducted over a period of 2 years, 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

2023 promises an interesting ride for print in India

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. While the print and packaging industries have been resilient in the past 33 months since the pandemic lockdown of 25 March 2020, the commercial printing and newspaper industries have yet to recover their pre-Covid trajectory.

The fragmented commercial printing industry faces substantial challenges as does the newspaper industry. While digital short-run printing and the signage industry seem to be recovering a bit faster, ultimately their growth will also be moderated by the progress of the overall economy. On the other hand book printing exports are doing well but they too face several supply-chain and logistics challenges.

The price of publication papers including newsprint has been high in the past year while availability is diminished by several mills shutting down their publication paper and newsprint machines in the past four years. Indian paper mills are also exporting many types of paper and have raised prices for Indian printers. To some extent, this has helped in the recovery of the digital printing industry with its on-demand short-run and low-wastage paradigm.

Ultimately digital print and other digital channels will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future. For instance, there is no alternative to a rise in textbook consumption but this segment will only reach normality in the next financial year beginning on 1 April 2023.

Thus while the new normal is a moving target and many commercial printers look to diversification, we believe that our target audiences may shift and change. Like them, we will also have to adapt with agility to keep up with their business and technical information needs.

Our 2023 media kit is ready, and it is the right time to take stock and reconnect with your potential markets and customers. Print is the glue for the growth of liberal education, new industry, and an emerging economy. We seek your participation in what promises to be an interesting ride.

– Naresh Khanna

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