Contents
Overview....................................................................................................................... 4
Cloudy near term – employment generation 5
Cloudy near term – infrastructure and corporate capex 5
What happened in China? 5
India is closely following China 5
Significantly more policy action is needed 6
Impact of the structural drivers 6
The state of India today ................................................................................................. 7
High on consumption, low on investment 7
High on services, low on industry 7
Low product and services penetration 8
An average Indian’s wallet allocation 9
India has terrible infrastructure 10
The East Asian growth experience 11
Drivers: Demographics, affluence, urbanisation .......................................................... 12
A large demographic dividend 12
Increasing affluence 14
Rising urbanisation 15
The economic impact 17
What happened in China? ........................................................................................... 18
The caveat: More steps are needed to maximise demographic dividend.................... 23
Increase labour-market flexibility 23
More investment in education and vocational training 24
Lower cost of business by losing bureaucratic hurdles 25
Where’s the land for industry? 25
The investment conclusions ........................................................................................ 26
Company profiles......................................................................................................... 29
Bharti Airtel, Bharat Heavy Electricals, Cairn India, Grasim Industries, HDFC, Hero Honda Motors,
ICICI Bank, Indiabulls Real Estate, Maruti Suzuki India, NTPC, Reliance Industries, State Bank of
India, Sun Pharmaceutical Industries, and Tata Steel.
Valuation of BNP Paribas coverage universe.............................................................. 70