Indian average earning crossed $1100/month…the next Super Power?
Saturday, November 10, 2007
Indian average earning crossed $1100/month…the next Super Power. Expected by 2015 it would cross $2500. The change is evident. Everything is changing like Consumerism, Brand Awareness to the general life Style. The life of Multinational Companies and their work culture impacted a lot and acted as the change agent to this continuous change in Indian economy. Measured in comparable units of purchasing power, the U.S. economy, at $10.7 trillion, is currently almost twice the size of China's ($6.3 trillion) and three times the size of India's ($3.6 trillion). The much higher U.S. per capita income, almost eight times that of China and roughly 11 times that of India, is partially offset by the much larger populations of the two Asian countries. But with per capita incomes in China and India likely to grow more rapidly than in the U.S., thus narrowing the large gaps in living standards, both Asian economies will eventually surpass the U.S. Now both economies are soaring. China's aggregate GNP has grown by about 10% a year since the late 1970s and India's has grown by about 6% a year since 1991, compared with annual U.S. economic growth of about 3.5%. China's and India's soaring growth rates will decline as the income gap with the U.S. narrows. The closer both countries come to the technological levels of the U.S. and other rich countries, the fewer opportunities there will be to import technological know-how. The slowdown is likely to be gradual, however, so both countries, and others like them, will have economic growth greater than that of the U.S. for decades to come. Econometric evidence suggests that when the income gap between China and the U.S. narrows by half, China's growth advantage will decline by about 1.4 percentage points per year. China's per capita income is currently about 13% of that of the U.S., and per capita GNP in China is growing about 4.6 percentage points per year faster than in the U.S. So when China's per capita income reaches 26% of the U.S. level, the annual growth advantage should fall to about 3.2 percentage points. Still later, when China's per capita income level reaches about half the U.S. level, China's growth advantage will be about 1.8 percentage points. Extrapolating based on this rule of thumb, China would reach about half the U.S. per capita income level by the year 2050, while its projected population of some 1.4 billion will be about 3.4 times the U.S. population of about 400 million. At that point China's GNP would be about 75% larger than that of the U.S. By a similar calculation, assuming that India's annual per capita income growth now exceeds the U.S. rate by about four percentage points, India's per capita income would reach a little more than a quarter of the U.S. level by 2050, with a population nearly four times as large, leading to an overall economy about the same size as that of the U.S. This rise of life style and costs of living already sky rocketing and many cost sensitive processes are not selecting India to be the most preferred destination lately, still many companies coming and Indian BPO Industries are now finding the shift of more knowledge based jobs known as KPO than BPO, which needs more specialized manpower. Few companies in Pune started supporting H&R Block, so payroll pocessing, paralegal processings, accountings are now coming to India looking for sectoral and specialized manpower in that particular domain. To friend and foe alike, the U.S. appears to be the unchallenged power in the world. The French call the U.S. a hyperpower. Neoconservatives believe it is a new Rome. But both greatly exaggerate U.S. preeminence--and its staying power. American power rests mainly on advanced technology, which is increasingly available to the whole world. While the economies of China and India are considerably smaller than that of the U.S., China is likely to overtake and India to equal the U.S. economy in size by mid-century. And as the world's economic center of gravity shifts to Asia, U.S. preeminence would inevitably diminish. Data compiled from CNN Fortune