Stephen Roach: Here Comes The Indian Consumer

Morgan Stanley Chief Economist Stephen Roach writes: India is on the cusp of something big. After my third trip there in 18 months, I am as enthusiastic about India as I was about China in the late 1990s. What excites me the most is the potential for an increasingly powerful internal consumption dynamic — the missing link in most development models.

His key conclusions:

The analytics and evidence of an emerging Indian consumption dynamic are compelling:

1. India’s consumption share of GDP is 64% — higher than that of Europe (58%), Japan (55%), and China (42%).
2. Corporate India has very sophisticated pro-consumption strategies — about to be augmented by a hyper-store-led consolidation of a very fragmented retail distribution system.
3. The political constraints of its coalition government are overblown; in a meeting with Prime Minister Manmohan Singh, I detected a fierce resolve on the reform front.
4. The context of reforms is shifting to “inclusion