McKinsey says Maharashtra's 128 million residents will have a purchasing-power parity similar to that of today's Brazil by 2025
India's average economic growth by 2025 could be in the region of 7.2% annually as the country's 29 states and seven Union territories are at different stages of demographic and economic evolution, said McKinsey & Company in a recent report.
The report,`India's economic geography in 2025: states, clusters and cities' further states rapid urbanisation and associated income growth will propel high-performing states to per capita income levels similar to those of today's middle-income nations.
By 2025, Maharashtra's 128 million residents will have a purchasing-power parity similar to that of today's Brazil while Goa and Chandigarh will mirror that of Spain today, the report said.
Eight high-performing states will account for some 52% of India's incremental GDP growth from 2012 to 2025. Along with four very high-performing city-states, these eight will have 57% of India's consuming-class households in 2025. But the caveat is that the reforms must be on-going and the next general elections in 2019 should also be a government with a decisive mandate
Given the above variables, the report assumes a growth rate of 6.1% as the base case annual rate of long term GDP.
How would new cities be formed?
The report says that just 49 of them (183 districts) will account for about 77% of India's incremental GDP, 72% of its consuming-class households, and 73% of its income pool from 2012 to 2025. Top-ranked metropolitan districts will constitute the nucleus of these clusters and the surrounding high-potential districts will make them serviceable markets with similar psychographics.
What will be the features of these clusters ?
The clusters will be at least on par with India as a whole on core development parametres, such as access within the household to basic urban services like water supply, sanitation, and electricity. They are, therefore, appropriate for companies looking to expand into areas where access to basic infrastructure does not pose a binding constraint.
How many metros will India have?
Sixty-nine, by 2025. Together with the hinterlands (79 districts), they will account for 54% of the country's incremental GDP from 2012 to 2025 and for 50% of its total income in the terminal year. In short, focusing on these 79 districts would provide companies with access to a market potential similar to the one offered by the eight high-performing states.
For example, in 2012, India had 54 metropolitan cities, which together with their hinterlands (65 districts) accounted for 40 percent of GDP and 45 percent of consuming-class households. By 2025, 79 metropolitan clusters in India will provide the same market size as eight high-performing states, the report said.
Which are the emerging cities?
The report has identified key economic and business growth hotspots for the period up to 2025. The emerging cities include Jamnagar, Dehradun, Cuttack, Bhavnagar, Kolhapur, Vellore, Amaravati, Ajmer, Udaipur, Sangli, Nanded and Mangalore.
What are the pre-requisites for growth?
The report says that the next government in 2019 should also have a decisive mandate and development will be subject to the pace of reforms undertaken by the centre and state governments and global political and investment climate.
Given the above variables, the report assumes a growth rate of 6.1% as the base case annual rate of long-term GDP.
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