India has been a positive surprise of 2014. In a relatively volatile year for the stock markets at the beginning of October, the country’s main equity index, the Sensex, was up from 12 months to about 38% and more than 27% compared to the end of 2013. This performance was achieved despite the recent correction of emerging actions and those of the world in general. Even the Indian rupee has seen a strong recovery, which was followed by a decline against the dollar but it is simply plugged into the framework of the brutal force of the greenback. Today the uniform of Mumbai exchanges in the 61.5 to 62, virtually unchanged in 2014 and in recovery compared to a minimum of ten years in the autumn touched a year ago to nearly 69 per dollar. Sure it is a level still very weak compared to the threshold of about 38 touched in early 2008 in the last days of the carry trade in emerging markets funded by the dollar, before the great financial crisis.
Overall, though, it is definitely interesting and unexpected performance, especially for a nation that was recently associated with a state of perpetual crisis and considered the largest and most problematic member of the group of Fragile Five. India, in fact, seemed bogged in the typical problems that characterized the countries in the developing world a few decades ago: high public debt (67.7% of GDP at the end of 2013), a poor industrial productivity accompanied by an excess of imports, strong inflation, low real growth (at the end of the fiscal year ended March 2014 the gross domestic product rose just 4.7%, a rate almost halved compared to 9% in 2011) and infrastructural deficit and skills of the population. In practice, a nation that threatened to get out of the emerging market to return in the middle of the old Third World. All of this is also complicated by a huge population very diverse in terms of languages spoken, costumes, stage of development and religious beliefs.
Not a few observers in recent years have often compared (unfavorably) India to another great giant of the world, China. The latter, however, has a per capita GDP that is about four times that of India, is flying into the role of world’s biggest economy, showing the greatest industrial system on the planet, boasting almost 4 trillion in foreign exchange reserves in the central bank (compared to a value almost irrelevant in India), occupies the first or second position in terms of absolute size in almost every category (two-thirds of the population of his eternal rival, over 800 million people live two dollars a day or less) and continues to grow at a pace well above the rest of the emerging world, despite a structural slowdown.
But it would be a mistake to ignore the potential of a reality destined, given the demographic trends in place, to become, within a relatively modest timeframe, the most populous nation in the world. In addition, the Indian talent, even at the industrial level, should not be underestimated: the country is home to some huge manufacturing complexes, Arcelor-Mittal galaxies Reliance and Tata and Maruti group. The share of exports in the Asian sub-continent of the world total has increased from 0.9% in 1990 to 1.5% last year. Of course, even in this case the comparison with China, which holds approximately 11% of global exports, is merciless, but in addition to the lack of productivity it must be remembered that the homeland of Gandhi has some disadvantages, such as lower endowment of natural resources compared to China, and the current account deficit.
Finally we are going to remind you of the speech made at the opening of financial markets: Mumbai here presents a framework of the highest order, with financial markets relatively transparent, liquid, diversified and high-quality assets on which foreigners can invest in a manner quite easy. In this case it is the duty China to pursue, with still a certain reluctance on the part of the best private companies in the country to being listed on a stock exchange, which only now is making the leap to the general openness to foreign investors.