| Trillion dollar baby. By April, that's just how big the Indian economy will be. And, with a per capita income of over $1,000 per head, India will now be a lower middle-income country instead of a poor one. At 110 per cent of GDP, annual capital flows in and out of the economy are well over a trillion dollars already. Befitting the change in status, India was the world's second-best performing market in 2007 with an increase in market capitalisation of, you got it, a trillion dollars! Hardly surprising then, that within Asia, India had amongst the highest FII inflows "" a study by Shah/Patnaik shows the bulk of this was the result of a vastly improved corporate performance and not just a part of the rush-to-emerging markets behaviour of FIIs. As a result of this corporate surge and India's tax reforms, direct taxes exceeded indirect taxes for the first time ever. Growth is slowing a bit, but investments and corporate profits still look robust. Happy New Year! |
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