other expert opinion, Forbes magazine says that “India has strong potential to be the next great bull market of the 21st century” clearly outpacing China as a better investment opportunity. Since 1990s when economic reforms was initiated, India has seen exports grow annually by 20%, personal tax rates were cut from 50% to 30%, non-performing assets of banks dropped below 4%, and the nation has foreign reserves valued at USD 156 billion.
Forbes cites 6 reasons why it values India higher than China. It includes multi-party democracy, better capital market, growth of gross domestic product (GDP) spurred by internal generation and less dependent on external investments, infrastructure needs massive investments for growth, under-valued markets and companies, and strong
property and intellectual property management.
Hosting the oldest stock exchange in the world, India has 6000 publicly-traded companies that have access to bank credit with more than 100 companies with a market capitalization of over USD 1 billion. Compared to this, only 10% of bank credit in China goes to private companies.
China’s disastrous and draconian one-child policy has resulted in ageing population that could lead to manpower shortages. Compared to this, the ineffective population schemes in India has resulted accidentally as an advantage with more than half the population being under 25. Forbes says that currently 20% of Shanghai residents are over 60 which will be 33% by 2020.
While 250 million people in India live below the poverty line, middle class has quadrupled in the last 20 years to be 250 million.
Like the Economic Strategy Institute, Forbes says that while
investments in China are good for the short-term,
investments in India will payoff big time in the long-term.