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Country Briefing: India
million of India’s 1.13 billion people live in more than 550,000 villages and rural areas in relative
poverty (about 260 million are believed to live on less than $1 a day), while the remainder live in
some 2,000 towns and cities. Nearly a third of India’s population—a number larger than the U.S.
population—is under 15 years of age. Half is under 25, making India the youngest major
economy in the world.
Education
India’s education system is marked by vast disparities. Elite institutions of higher education, such
as the famed Indian Institutes of Technology (IIT) and the Indian Institutes of Management
(IIM), generate graduates that compete with the world’s best and are in high global demand. The
small number of such institutions relative to the demand for higher education has spawned a
growing number of private colleges and universities—of variable quality. Competition for slots in
the top 10% is intense, particularly in engineering and medicine.
Meanwhile, primary and secondary education fails at many levels. The half of India’s population
under twenty-five includes more than 360 million children of school age. Of those, half leave
school by the eighth grade. UNESCO estimates that India will need two million more teachers
by 2015. The curriculum for teacher training, however, is antiquated, and on any given day as
many as 25% of teachers are absent. The problem is particularly acute in rural areas.
A Growing Middle Class
An estimated 60 million Indians have individual incomes at or above levels which the Indian
National Council of Applied Economic Research uses to define middle class. Using the criteria
in a CNN-IBN-Hindustan Times Study—ownership of a telephone, motorized vehicle and color
television—as many as 200 million Indians fit the description.
As of January 2009, the Telecom Regulatory Authority of India (TRAI) put the nation’s total
telephone market at 400 million subscribers, with the wireless segment accounting for 362 million
and adding an average 8-10 million new users per month. At the same time, telephones of
any kind are in the hands of fewer than 35% of Indians, leaving room for further market growth.
Internet use is estimated at around 45 million people, less than a 5% market penetration.
Goldman Sachs predicts that per capita incomes in India will multiply four-fold by 2020;
McKinsey & Company expects the Indian middle class to grow to 583 million by 2025, with
middle class consumers accounting for 59% of total consumer spending and urban dwellers
accounting for 62%, up from 43% today. India’s retail sector, currently around $300 billion, is
expected to more than double to $637 billion by 2015.
Longstanding government policies protect small, often family-run, domestic businesses by imposing
strict workplace rules on business beyond a threshold size, and by prohibiting foreign
investment in “multi-brand” big box retail. Nonetheless, global players like Walmart and Tesco
are making inroads through respective alliances with domestic multi-brand retailers Bharti
Enterprises and Tata Group. Walmart and Tesco are opening large “cash-and-carry” wholesale
outlets allowed by the government to supply retail and institutional customers and will provide
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