India overtaking China just a pipe dream

India overtaking China just a pipe dream

Do not wait for ideal circumstances nor for the best opportunities; they will never come.

 [color-box color=”red”]India has had many aspirations to overtake China, and it might be able to do so in terms of economic growth rate, but never in terms of size.  It is miles behind China in terms of GDP; it has the world’s 7th largest economy for crying out loud. If it were 3rd or 4th we could understand the big hoopla this question is creating, but it’s not, so the answer is simple: India will never overtake China at least not in this century. [/color-box]

India overtaking China just a pipe dream

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India’s corruption makes China’s corruption seem non-existent.  Add in the traffic jams, stench, and filth one has to deal with in parts of Mumbai and Delhi, and the allure of investing in India loses its appeal rather rapidly.  This is the reason India continues to suffer such a massive amount of brain drain.  Smart Indians understand that their best option is to seek greener pastures.  Modi’s government had the strongest mandate of any government, yet like all his predecessors he seems to be all talk and little to no action; he has failed to implement any noteworthy changes.

The first thing he should have done was to streamline the investment process, make it easy dam it for foreigners to invest. With foreign investment comes a plethora of jobs; instead he continues to chant the same old song of change while marching to the drumbeat of no change.  India will never catch up with China at least not in this century. This century belongs to China, and the world recognises this. No one flinches when Indian markets are tanking but if Chinese markets tank or there is some bad news coming out of China the world’s financial markets react and in most cases the reaction is usually very strong. From a mass psychology perspective, this tells us that the financial markets recognise China as the defacto leader and India if it’s lucky might manage to hold onto some position in the top 5. If you are investor forget about India taking out China, it will not happen anytime soon.  Some Indian companies are still worth investing in, and one should wait for strong pullbacks before coming money into any of these stocks.

We are going to list a few of Jim Rogers’s recent quotes as he seems to share the same sentiment

You can’t just invest on hope. Even If reforms started coming, it may not be enough to make the markets go higher, because markets have already factored it in. If the reforms are substantial, the markets may go higher. No indication of that.

If Modi made the currency convertible, if he made the markets open to outsiders, then I would have to be back in India again. So far Modi has been doing worthwhile things like addressing some social issues—I am all for that, and that is great for a lot of people—but India needs more.

You have saved your farmers by making it illegal for foreigners to own more than five hectares—how on earth can an Indian farmer compete with an Australian farmer with 50,000 hectares? In history, India has been one of the great agricultural nations of the world—you have the land, the people, weather—God gave you everything. And then, he also gave you Delhi to mess it all up.

[color-box color=”blue”]Conclusion

While the Indian economy has grown nicely over the years, we think the tiger will have a hard time dethroning the Golden Dragon. India’s has a GDP of roughly $2.1 trillion, and that sadly is a long way off from China’s current GDP of $11.3 trillion.

At this stage, it’s not even a close race. In fact, the odds are higher that China will displace the US as the top dog than India overtaking China.   While there are some great companies in India, from a long-term perspective, China makes for a better investment as the market is extremely oversold; great companies are selling for a fraction of their former prices.  For example, CHH, CHL TCEHY, BABA, are good [/color-box]

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