Brazil in 2031

India 2031

by Jonathan Bensky, Director, South Asia, Pacific NW Advisors, Seattle


I first visited India in the late 1960’s, when I served as a Peace Corps Volunteer in Nepal, five miles from the border with India. My village’s altitude was only 200 feet and the language(s) the villagers spoke were related to Hindi, not Nepali, so I was really living in north India. I first lived in India itself from 1970 – 71 as a graduate student studying Hindi, living in the old city of Delhi. In those days the Indian tourist office ran ads in U.S. publications promoting India as “the land that time can never change.” Westerners living there were sure the Indians did not know how right they were – but they were wrong. India – or at least great parts of it – have indeed changed, and will continue to do so.

To guess where India will be twenty years from now a good perspective might be where India was twenty years ago. 1991’s inaugural year for TDA coincided with the opening of the Indian economy, engineered by then Finance Minister – and now Prime Minister – Manmohan Singh. Of course, the change of course in Indian economic policy was not entirely voluntary. Foreign exchange reserves had dwindled to dangerous levels. Now, in 2011, India’s reserves are close to $300 billion, several hundred times higher. At present trends those reserves will be well over $1 trillion by 2031.

India’s Private Sector

Unlike China, India has always had a significant private sector, as twisted and misshapen as it might have been by government command and control. The “license raj” controlled not only what an industry could produce, but how much. Woe to the shoe manufacturer who made one pair more than his license allowed. Companies made money in two ways – by managing their business or by managing the government. Since 1991 the heavy hand of the license raj has been mostly – but by no means completely – lifted. By 2031 it will have almost – but, again, not completely – disappeared.

Here’s a good example of how this has worked. In 1991 the few Indians who had cars were mostly driving “Ambassador” cars, identical to the old (1954) British Morris Oxford sedan. The new car on the block then was the Maruti, made with Suzuki minority interest, but controlled by the government. Now a dozen major international car companies are building and designing cars in India, and Suzuki controls Maruti. A telling picture in a recent Wall Street Journal showed hundreds of new Hyundai cars parked next to a car carrier ship in the port of Chennai – but those cars were being exported from India, not imported. By 2031 – and probably much sooner – India will be the world’s leading designer and producer of small cars.


Already car sales in India are approaching two million a year; by 2031 that will certainly be much higher. India’s urban traffic jams are not yet world renowned, but by then they will be – roads will be just another example of how infrastructure simply has not and will not keep up. India’s 1.2 billion people will be 1.5 billion by then (making India larger than China). India’s four megacities – New Delhi, Calcutta, Mumbai and Chennai – will double by then as well, adding Bangalore, Hyderabad, Ahmedabad, and perhaps Lucknow to the list. In 1971 New Delhi had 4 million people, in 1991 10 million, in 2011 15 million and by 2031 30 million is not out of the question. One saving grace in the 2031 urban gridlock will be new mass transit systems in these megacities. New Delhi’s subway system is already up and running well and being expanded. Bangalore’s is under construction and Chennai’s is expanding.

Currently 700 million or 60% of Indians live in villages and small towns – by 2031 that number will be no higher than 600 million, or 40 percent. Sometime between now and 2031 a majority of Indians will be, for the first time in the country’s 3000 year history, urban dwellers. Their spending habits will change as well. Today no more than four per cent of retail sales are in the “organized” sector, i.e., through chain stores. Large Indian corporations are starting their own retail food and nonfood chains. Wal-Mart and Carrefour have partnered with local companies for wholesale distribution. They are not yet allowed in the retail sector – but they will be. By 2031 many of the same chains we see in the U.S. will be operating in India along with “home grown” brands. They won’t just be in the megacities, either, but in the dozens of smaller cities which will finally have direct access to international trade. Today’s 200-300 million middle class (depending on how it’s defined) will easily have more than doubled, with its purchasing power expanded geometrically.

Those chain stores will probably still need their own power generation, at least on standby. The opening of the economy in 1991 has yet to solve India’s massive infrastructure bottlenecks, primarily in electricity generation. Several new nuclear plants will come on stream by 2031, along with other conventional power generators, but it won’t be enough. Electricity will still be in short supply. Energy availability grew at less than 4% annually from 1990 to 2010 and is forecast to grow no faster to 2031.

Calling India

One infrastructure sector is an exception – communications. Because cellphones were left to the private sector to develop, India has gone from almost no cellphones ten years ago to 600 million today – literally half of all Indians have cellphones. By 2031 that will be close to all. What Indians don’t have today is internet access. Only six percent of the population has an internet connection. By 2031 with whatever technology has supplanted 3G and 4G by then, most Indians will have internet access – again, as with cellphones, using wireless connections.

In 2011 more than one out of three Indians is under 15 years old – by 2031 that will be one of five. India will be the largest country in the world, but its population will have peaked. Today less than two out of three Indians has had any primary education; by 2031 at present rates of growth the entire population should be literate, with perhaps as many as half having attended high school.

From 1990 to 2000 Indian’s per capita GDP grew at a 5% annual rate. Despite infrastructure and energy bottlenecks, growth from 2000 to 2010 averaged more than 8% annually. Given that performance, there is no reason to think India cannot continue to grow at similar rates until 2031. Today India is the fourth largest economy in the world in terms of purchasing power parity. By 2031 India will be third, behind only China and the U.S.