India’s Incredible Economic Potential, in 9 Charts

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India is on the path to becoming a global economic superpower later this century, but there are many challenges to overcome.

India is a global giant. Its population of 1.25 billion is second only to China’s 1.35 billion. It is also still an emerging economy, with significant hurdles, including widespread poverty and corruption, to clearly reach fully developed status. But certainly, the challenges are surmountable, and if India does, in fact, continue on its rise, it should become a global economic powerhouse by the middle of this century.

Sheer Size

The sheer size of India is hard for many to fathom. Put it this way: India has a population roughly four times the size of that of the United States and in an area approximately one-third the size. And the population is only growing larger.

Enormous Population

In 1950, India’s population was a little more than double that of the United States. Today, India has a population four times the size of the American population, having grown faster over the last 65 years.

Data source: United Nations Department of Economic and Social Affairs

Young Population

Perhaps as important as the size of the population is the age of the population. India is very young, especially compared to the aging United States. Nearly 60 percent of the Indian population is under the age of 30, compared to only 40 percent of the U.S. population that falls into that age group.

Data source: United Nations Statistics Division

An enormous, young population is projected to beget more population growth over the next 35 years. Compare India’s projected population to that of the U.S., from 2015 to 2050.

Data source: United Nations Statistics Division

Massive Potential

India’s current economy (particularly the labor force) is in some ways reminiscent of the economy of mid-20th century America. Widespread tech usage has not been achieved, so there is a vast amount of untapped potential.

Internet Users

India’s Internet usage lags far behind the worldwide average and other developing BRIC nations, allowing significant room for growth in the coming years as hundreds of millions get online for the first time.

Data source: The World Bank

Cell Phone Penetration

Cell phone penetration is currently much stronger than Internet usage but still has a ways to go before catching up to other developing BRIC nations.

Data source: The World Bank

Labor Force

Nearly half of India’s labour force is still employed in the agriculture sector, despite the fact that it contributes only 18 percent to the nation’s GDP. As more of the Indian labour force moves into the services sector, the nation’s GDP should begin to show exponential growth.

Data source: CIA World Factbook

Big Hurdles

India is vast and growing and has massive untapped economic potential. But there are also several obstacles for the nation to overcome on its transition to an economic superpower.

Poverty

Although much improved over the past two decades, India is still deeply impoverished, with nearly one-quarter of the population living below the poverty line — per The World Bank’s definition of $1.25 (2005 PPP) per day — as recently as 2011. A comparison with China yields fascinating results. China’s poverty rate declined from 55 percent to 6 percent in under 20 years — a drop of 49 points. But during that same period, India’s poverty rate declined only 25 points — from 49 percent to 24 percent.

Data source: The World Bank. No data for India was available for 1996 through 2002.

Corruption

Another challenge facing India is the level of corruption in the country. Non-profit NGO Transparency International has collected data on this admittedly difficult to measure metric. Although India does rank as less corrupt than some of its peers, such as China, Pakistan, and Russia, it ranks below the world average and still has a ways to go before catching up to Brazil and Cuba, not to mention the major developed economies of the world.

Oil Importer

India’s energy needs are growing at exponential rates and will continue to do so for the foreseeable future. Unfortunately, the vast majority of India’s crude oil is imported, not produced domestically, which may serve as a serious drain on the economy in the coming decades until alternative energy sources become commonplace. India imports five times as much crude oil as they produce, a huge figure compared to their BRIC peers and the U.S. (Brazil and Russia are both net exporters of oil).

Data source: CIA World Factbook. The Year of data varies by country, from 2011 to 2014. Check source for additional information.

About the Author: Jimmy Atkinson

Jimmy Atkinson is managing editor of All Emerging Markets and also serves as CFO of parent company Poseidon Financial. A veteran Internet entrepreneur with a background in economics, he is pass


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