Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: At the edge of New Delhi, in the city of Noida,
Speaker 2: the groundwork for India's economic future is being built. Vast
Speaker 2: blocks of electronics factories have sprung up there, from a
Speaker 2: million square foot Dixon Technologies plant staffed by about twenty
Speaker 2: six thousand workers to a Samsung facility that's turning out
Speaker 2: one hundred and twenty million phones a year. This new
Speaker 2: manufacturing hub is at the heart of a push led
Speaker 2: by India's Prime Minister Narendra Modi to turn the country
Speaker 2: into a manufacturing powerhouse and an engine of global economic growth.
Speaker 2: Here's Mody talking to Congress in Washington last summer.
Speaker 3: Today, India is the fifth largest kona.
Speaker 1: Okay, and.
Speaker 3: India will be the far larger economy soon. We are
Speaker 3: not only growing bigger, but we are also growing faster.
Speaker 2: And already there are some signs that the plan is working.
Speaker 2: Foreign investment is pouring in, the country's stock market is booming,
Speaker 2: and manufacturers are ramping up production.
Speaker 1: India is posting some of the most robust economic growth
Speaker 1: rates right now in the world. It's far and away
Speaker 1: the world's fastest growing major economy on the world stage.
Speaker 2: That's Dan Strump, who covers economics and politics from New
Speaker 2: Delhi for Bloomberg, and he says, there's another big reason
Speaker 2: analysts and economists are paying attention to India right now.
Speaker 1: Why is everybody so interested in India? Well, I mean,
Speaker 1: of course, one of the biggest reasons is simply that
Speaker 1: it's not China.
Speaker 2: That's because while India's me is speeding up, China's has
Speaker 2: been slowing down. And with China's strained global trade relations,
Speaker 2: it looks like India has a unique opportunity to overtake
Speaker 2: it as the world's largest contributor to growth. But to
Speaker 2: achieve Prime Minister Modi's most ambitious goals, India still has
Speaker 2: a lot of work to do, from modernizing its infrastructure,
Speaker 2: to growing its workforce, to building out its urban centers.
Speaker 1: India needs a lot more cities.
Speaker 2: This is Goldman Sachs's India economists Santanus and Gupta speaking
Speaker 2: to the Bloomberg Originals team. There is a lot of
Speaker 2: progress already happening, but there are crucial problems like water,
Speaker 2: like traffic, like orbit housing that needs to be solved today.
Speaker 2: On the show, could a thriving India follow in China's
Speaker 2: economic footsteps and what will it take to rival its growth?
Speaker 2: From Bloomberg News. This is the big take. I'm Sarah Holder.
Speaker 2: So for years China's economy grew at the fastest pace
Speaker 2: in the world, but now it slowed down considerably. I
Speaker 2: asked Dan Strump, What is it about the Indian economy
Speaker 2: today that has people saying it could see growth at
Speaker 2: the rate China once did?
Speaker 1: On paper, there's actually a lot of similarities. India is
Speaker 1: now the world's largest country by population, just surpassed China
Speaker 1: one point four billion people. It has economic growth, which
Speaker 1: is very scarce around the world right now, and there's
Speaker 1: a number of other factors working in India's favor. It
Speaker 1: has what economists referred to as a demographic dividend, which
Speaker 1: is that it has this sort of young, growing population
Speaker 1: that is hungry for work and can be put to work,
Speaker 1: can be put to productive work. China, of course, has
Speaker 1: an aging population and a shrinking population as to many
Speaker 1: developed economies around the world. So all of these kind
Speaker 1: of factors are coming together to work in India's.
Speaker 2: Prime Minister Modi has pledged to capitalize on this potential
Speaker 2: as he seeks a third term in office, he's promised
Speaker 2: to take India to the top position in the world
Speaker 2: and a big part of the plan is to expand
Speaker 2: India's manufacturing capacity to bring it up to a quarter
Speaker 2: of the country's GDP. But there's a lot that has
Speaker 2: to happen first, starting with building better infrastructure.
Speaker 1: This is really a big and long standing issue in India.
Speaker 1: India still lags on a number of metrics, say compared
Speaker 1: to China, which I mean if you go to say,
Speaker 1: the sort of manufacturing corridors of southern China, for example,
Speaker 1: I mean you'll just see world class infrastructure, world class highways.
Speaker 1: China is of course known for its extremely well developed
Speaker 1: high speed rail network that took many years to build.
Speaker 1: And India has long struggled with things like roads. You know,
Speaker 1: the quality of its railroads. It has insufficient airports in
Speaker 1: sufficient ports, and these are the sort of things that
Speaker 1: you need to attract things like foreign manufacturers. So infrastructure
Speaker 1: has been a major priority for the Modi administration.
Speaker 2: Modi's administration has promised to commit one hundred and forty
Speaker 2: three trillion rupees the equivalent of well over a trillion
Speaker 2: dollars to infrastructure in the next few years. Some of
Speaker 2: that money will go towards new airports. Indio last year
Speaker 2: had about one hundred and forty eight airports, but they
Speaker 2: plan to boost the number to two hundred and twenty
Speaker 2: next year. They're also working on their railways and their roads.
Speaker 1: One of the most sort of touted projects when it
Speaker 1: comes to high speed rail is a forthcoming railway that
Speaker 1: is meant to connect Gujarat, which is Mody's home state,
Speaker 1: with Mumbai, which is the financial capital. And this has
Speaker 1: yet to come online, but it's as much tied project,
Speaker 1: and the ambition is that it's one of a number
Speaker 1: of new projects that will kind of help together all
Speaker 1: of these up and coming Indian industrial and financial centers.
Speaker 1: Another project is a major highway that's meant to be
Speaker 1: connecting Mumbai with New Deli, the capital, and that's actually
Speaker 1: up and running. Things like that help reduce logistics costs
Speaker 1: and help reduce the overhead that businesses and investors are
Speaker 1: paying to do business here, and that's really sort of
Speaker 1: the benefit that it's hoped gets reaped from investment projects
Speaker 1: like that.
Speaker 2: To see the kind of growth at once, India will
Speaker 2: also have to drive up its labor force participation, which
Speaker 2: is currently among the lowest in the world. Only a
Speaker 2: little over half the country's working age population was working
Speaker 2: or looking for a job as of twenty twenty two.
Speaker 2: Rates are even lower for women.
Speaker 1: This is a huge problem because they're of course, I mean,
Speaker 1: you just you need more people to be in the
Speaker 1: workforce if you want to generate growth. But it's also
Speaker 1: a huge social problem. I mean, India suffers from high unemployment.
Speaker 1: So right now, a very large share of its economy
Speaker 1: is agricultural, and many economists point to the fact that
Speaker 1: India's workforce is under educated. There are jobs in the
Speaker 1: service sector, there are jobs in high tech industries in
Speaker 1: places like Bangalore hydrobod and then there's and then there's
Speaker 1: jobs for people in the agricultural sector, which is low
Speaker 1: skilled labor. But there's there's really a need to increase
Speaker 1: the share of workers kind of in that in that
Speaker 1: middle area, right who can do things like working factories
Speaker 1: in large numbers or manage factories.
Speaker 2: It seems like one of the broader goals for growing
Speaker 2: India's economy is to grow the country's middle class the
Speaker 2: same way China has been able to. How could that
Speaker 2: reshape the Indian economy.
Speaker 1: So yeah, I mean this is this is absolutely the case.
Speaker 1: The development of India's middle class is really linked inextricably
Speaker 1: with building out the manufacturing industry. And the reason for
Speaker 1: that that many economists point to is that manufacturing is
Speaker 1: one of the few sectors in an economy that really
Speaker 1: is able to generate large numbers of jobs and large
Speaker 1: numbers of jobs for people who have a little bit
Speaker 1: of education but might not be working in technology companies.
Speaker 1: And these are the people that Modi and India kind
Speaker 1: of need to put to work in order to develop
Speaker 1: boost the economic growth rate to a level that puts
Speaker 1: it on track to overtake China.
Speaker 2: If they do manage to get more people into the
Speaker 2: labor force and amp up their manufacturing sector, they'll need
Speaker 2: to build out their cities. Just thirty six percent of
Speaker 2: India's population live in cities versus over sixty four percent
Speaker 2: of China's. I asked Dan how India is thinking about urbanizing.
Speaker 1: I think this goes actually right to the infrastructure point.
Speaker 1: It's not just about serving business, it's about serving cities,
Speaker 1: and it's about building not just like highways and high
Speaker 1: speed rail, by metro lines and improved inner city highway
Speaker 1: links and things like this that are going to attract
Speaker 1: housing development, for example, that are going to attract people.
Speaker 1: I mean out in Neude, just by way of example,
Speaker 1: we saw a huge new plot of land where you've
Speaker 1: got what's meant to be a million square foot smartphone
Speaker 1: factory that's just broken ground right now. Just about a
Speaker 1: kilometer away or so in the distance, you've got about
Speaker 1: half a dozen high rises that have just come up
Speaker 1: that are just under construction that are meant to house
Speaker 1: a lot of these people to work in this plan.
Speaker 1: So you know, one sort of begets the other.
Speaker 2: But India's still got a lot of catching up to do.
Speaker 2: It's three point five trillion dollar economy today is only
Speaker 2: about a fifth of the size of China's. When we
Speaker 2: come back what India does economic ambitions mean for China
Speaker 2: and for the rest of the world. We've been speaking
Speaker 2: with Bloomberg reporter Dan Strump in New Delhi about India's
Speaker 2: potential to take the mantle from China as the global
Speaker 2: leader in economic growth. How much does India's success rely
Speaker 2: on eating China's lunch. Does India have to actually take jobs, factories,
Speaker 2: opportunities away from China?
Speaker 1: So there's two ways of looking at that. You could
Speaker 1: make the case that India doesn't need China to slow
Speaker 1: down to advance, but economic growth is not zero sum,
Speaker 1: and China and India actually have very robust economic ties,
Speaker 1: and so a slowing China isn't on all fronts necessarily
Speaker 1: good for India. I think what certainly, what Modi recognizes
Speaker 1: and what many foreign investors are kind of keying in on,
Speaker 1: is that they're is this growing desire around the world
Speaker 1: to kind of de risk away from China. We hear
Speaker 1: a lot of talk of this what's called this China
Speaker 1: plus one strategy, where you're a big manufacturer or multinational
Speaker 1: like Apple or Samsung or something that's had a big
Speaker 1: footprint in China for a long time. You don't necessarily
Speaker 1: want to pull out of China because you've got, say
Speaker 1: in the case of Apple, I mean really deep roots
Speaker 1: there and a massive supply chain that can't really be
Speaker 1: replicated overnight anywhere else. But you know, you're mindful of
Speaker 1: both the slow down happening in China and of the
Speaker 1: shifting geopolitical wins, and you want an alternative that will
Speaker 1: take a little bit of a heat off of that relationship.
Speaker 1: That is where India comes in for many of these companies,
Speaker 1: and many companies are trying to find a way as
Speaker 1: well to capitalize on this opportunity.
Speaker 2: And is it working so far? Is there a lot
Speaker 2: more foreign investment flooding into India's sense? It's you know,
Speaker 2: raised the bar on these economic expectations.
Speaker 1: So I think the answer that you would hear is
Speaker 1: that it's sort of working. It's not a clean one
Speaker 1: for one dollar for dollar. Everybody's pulling out of China
Speaker 1: and they're coming into India. It's a lot of that
Speaker 1: investment that say, might have been going into China. If
Speaker 1: you know, the world we're in a different place right now.
Speaker 1: It's getting spread out around the world. Some of it's
Speaker 1: going to India, but a lot of it's going to
Speaker 1: Southeast Asia. Vietnam, for example, is actually taking a lot
Speaker 1: of investment in manufacturing from companies that might have been
Speaker 1: investing in China. Of course, Mexico has also been a
Speaker 1: major recipient of a lot of this investment as well.
Speaker 1: India is getting some of it, but in many ways
Speaker 1: what you hear is that India remains a difficult place
Speaker 1: to do business. There's a lot of barriers to entry.
Speaker 1: There are complicated tax regimes to contend with, and the
Speaker 1: sort of wheels of government in India. You know, they're
Speaker 1: just grind more slowly, certainly than they do in China,
Speaker 1: where for better or for worse, one party rule has
Speaker 1: managed to streamline the economy in a very rapid and
Speaker 1: swift way.
Speaker 2: What will it mean for the US if India is
Speaker 2: able to deliver on these ambitious economic growth plans?
Speaker 1: So what the US season in India? I think is,
Speaker 1: in the best case scenario, a partner, you know, as
Speaker 1: a country you can work with, and as a country
Speaker 1: you can deal with, and you know, as a fellow democracy,
Speaker 1: as a country with some shared values. So a more
Speaker 1: economically vibrant India is a counterweight to China, which is
Speaker 1: increasingly the US's biggest global rival. So from a strategic
Speaker 1: point of view, India definitely represents a partner with the US,
Speaker 1: and it can also represent, you know, a place where
Speaker 1: a lot of US companies can invest in, and you're
Speaker 1: seeing a lot of that investment already coming in.
Speaker 2: We've been talking a lot about India's potential, but I
Speaker 2: wanted to ask Dan, doesn't this kind of rapid economic
Speaker 2: expansion have downsides too.
Speaker 1: Just to take the China case, I think it's very
Speaker 1: well documented that the biggest downsides to its economic expansion
Speaker 1: were the environmental side effects that came with it. The
Speaker 1: stories of pollution in places like Beijang and Shanghai. I mean,
Speaker 1: you're actually seeing that replicated in many Indian cities now,
Speaker 1: in places like New Delhi, where you know, the pollution
Speaker 1: is literally the worst in the world. So that's the
Speaker 1: most obvious downside to growth, and especially to rapid growth.
Speaker 2: Of that skill Sodan, You've really helped us understand the
Speaker 2: scale of India's ambitions, where they're at right now, where
Speaker 2: they go from here. You've also talked to a lot
Speaker 2: of analysts and economists who are following what's happening in
Speaker 2: India really closely. How realistic do they think these growth
Speaker 2: plans are?
Speaker 1: So our colleagues at Bloomberg Economics, they crunch the numbers.
Speaker 1: Their conclusion is that India actually can overtake China as
Speaker 1: the world's engine of economic growth, meaning it can be
Speaker 1: the world's largest contributor to global growth within this decade. Now,
Speaker 1: that's sort of in a best case scenario. Now, in
Speaker 1: a slower growth scenario, you would see that happening in
Speaker 1: the next decade. So I think that there is a
Speaker 1: strong belief that India can take this sort of mantle
Speaker 1: as the world's incremental driver of global growth as China
Speaker 1: slows down. And you know what that means for India
Speaker 1: is that it will continue to draw more foreign investment,
Speaker 1: It will continue to attract more investment from foreign companies,
Speaker 1: and it will continue to kind of grow as a
Speaker 1: player on the world stage.
Speaker 2: Well, Dan, thank you so much for joining us today
Speaker 2: and sharing your great reporting.
Speaker 1: Well, thank you so much.
Speaker 2: This has been The Big Take podcast from Bloomberg News.
Speaker 2: I'm Sarah Holder. This episode was produced by Alex Suguia.
Speaker 2: It was edited by Caitlin Kenny and Chris Anstey. It
Speaker 2: was mixed by Rishi Bijacole. It was fact checked by Naomi.
Speaker 2: Naomi Shavin is our senior producer. Elizabeth Ponso is our
Speaker 2: senior editor. Nicole Beemsterbor is our executive producer. Sage Bauman
Speaker 2: is Bloomberg's head of Podcasts. Please subscribe and review The
Speaker 2: Big Take wherever you listen to podcasts. It helps new
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Speaker 2: tomorrow