Supercycle 3 is here for India and China - Stay invested

[indexed]

Standard Chartered has come out with a report that the world is in the
throes of a third supercycle of growth. Supercycle is a period of
historically high global growth lasting a generation or more driven by
increasing trade, high rates of investment, urbanization and
technological innovation.

It says the first supercycle from 1870 to 1913 -saw the rise of the
US.
The second supercycle was from 1946 to the mid-70s - saw the rise of
Japan and East Asia and
The latest supercycle from around 2005 to 2030 which will see China
and India as the winners of the game.

Supercycle theory
The world economy is still doing quite well despite all the problems.
The world economy now is twice the size it was a decade ago. The world
economy now (USD 64 trillion) is bigger than it was before the euro
crisis began. However one should not ignore the fact that there are
problems in the near-term in the US, in Europe.

One also should acknowledge that the business cycle still exists in
India, in China and indeed there are near-term setbacks, that there
are variations along the way but the clear underlying message is that
the upper trend is very evident. In this calendar year for instance,
the emerging world which counts for one-third of the global economy is
accounting for two-thirds of global growth. It is evident that a shift
in the balance of economic and financial power shall move from west to
east (from dollar/ euro/ yen to yuan/ rupee/ rouble).

India in the next 20 years will probably do in some respect what Japan
did from 1945 upto the early 70s. Then Japan went from about 2-3% of
global growth to about 10%.

The economy of India is the eleventh largest economy in the world by
nominal GDP and the fourth largest by purchasing power parity
(PPP).Following strong economic reforms from the socialist inspired
economy of a post-independence Indian nation, the country began to
develop a fast-paced economic growth, as free market principles were
initiated in 1990 for international competition and foreign
investment. India is an emerging economic power with a very large pool
of human and natural resources, and a growing large pool of skilled
professionals. Economists predict that by 2020, India will be among
the leading economies of the world. According to the BRIC report,
published by Goldman Sachs, India will be the second largest economy
after China by 2043.

India's large service industry accounts for 55% of the country's Gross
Domestic Product (GDP) while the industrial and agricultural sector
contribute 28% and 17% respectively. Agriculture is the predominant
occupation in India, accounting for about 52% of employment. The
service sector makes up a further 34%, and industrial sector around
14%. The labour force totals half a billion workers. Major industries
include telecommunications, textiles, chemicals, food processing,
steel, transportation equipment, cement, mining, petroleum, machinery,
information technology enabled services and pharmaceuticals.

From 2004 until 2010, India's average quarterly GDP Growth was 8.37
percent reaching an historical high of 10.10 percent in September of
2006 and a record low of 5.50 percent in December of 2004.

India's per capita income (nominal) is $1,030, ranked 139th in the
world, while its per capita (PPP) of US$2,940 is ranked 128th. India
currently accounts for 1.5% of World trade as of 2007 according to the
WTO. According to the World Trade Statistics of the WTO in 2006,
India's total merchandise trade (counting exports and imports) was
valued at $294 billion in 2006 and India's services trade inclusive of
export and import was $143 billion. Thus, India's global economic
engagement in 2006 covering both merchandise and services trade was of
the order of $437 billion, up by a record 72% from a level of $253
billion in 2004. India's trade has reached a still relatively moderate
share 24% of GDP in 2006, up from 6% in 1985