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ULIPs underConventional Mode

By K.M.Srivathsan

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T h e S e n

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S e n s e

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Indian economy

African countries look at their natural wealth.South East Asian economies at theirelectronics. India, on the other hand, has

perhaps the highest number of diversifiedindustries and services. We make cars, wheels, tyres, axles, forgings,

bearings, brakes, paint the works. We havethe capability to make and break ships; we canmake heavy electrical equipment and alsodelicate engineering spares; we have theentire range of capabilities in drugs, textiles,diamonds and genetics.

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Indian economy

There are few countries with capabilities insuch a range of industries and services. This iswhat makes us unique.

- Uma Shashikant

- Outlook Money, December 15, 2004.

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Indian economy

The GDP growth in India is driven largely bydomestic growth factors. There is a huge surge inboth consumption and investment demand, which

is likely to lead to a growth in the GDP in theregion of 8-10% over the next 3-5 years.

The slowdown in the US is unlikely to have anysignificant impact on growth in India. The growth

story in India today is a secular growth story,which is unlikely to be impacted by a slowdown inother parts of the world.

Source: IRIS, Jan 04, 2007

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Indian economy

INDUSTRY-LED BOOM

The present boom is largely being led by industry

(more specifically, manufacturing) and services.While the industry as a whole is expected to growby 9.9% this fiscal, the corresponding rates formanufacturing are even higher, at 11.3% and11.2% respectively.

-The Hindu Business Line, Feb 8, 2007

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Indian economy

S&P marks up Indias rating

International rating agency Standard and Poors on

Tuesday has upgraded Indias sovereign ratingfrom speculative to investment grade. This comes15 years after the agency downgraded thecountry in 1991. The agency said the countrysoutlook is stable.

-The Hindu Business Line, Jan 30, 2007

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Indian economy

The other international ratings agencies havealready upgraded India to investment grade;Moodys Investor Service did so in 2004 followed

by Fitch Rating in 2006.

-The Hindu Business Line, Jan 30, 2007

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Indias populationgrowing richer

According to Deutsche Bank, India is likely tobe the worlds third richest economy by 2020,with a GDP of Rs 64 lakh crore.

544 million Indians will likely join theconsuming middle class between 2006 and2015; current size estimated at 250-300million.

Total consumption estimated around $550billion in 2006 as against $300-340 billion in2002.

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Indias populationgrowing richer

FMCG industry will grow to Rs 106300 crore by2012 compared to Rs 60000 crore now.

Today, 1.6 million people earn more than

$100000 a year; the number will grow to 3million by 2010

21 million Indians have a home loan todaycompared with only 2.6 million 10 years ago;

this is likely to double in the next 3 years. Market for luxury products in India isestimated at $444 million today; it was almostnon-existent a decade ago.

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Trends in the next 15years

Money managed by professionals will exceed$1 trillion (Rs. 45 lakh crore) from the current$114 billion (Rs.5.13 lakh crore).

Apart from Indian companies going global,many overseas companies will also list inIndia.

On a conservative basis, the Sensex willdouble from the current levels of 14000. In abest-case scenario, the index could hit 30000-35000.

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India Strategy Road to 50K

Morgan Stanley Research Asia/Pacific in its reportIndia Strategy Road to 50K dated January 31,2007 estimates the time to be taken for the SENSEX

to breach the 50000 mark.

13.5% CAGR8.6% CAGR10.4% CAGR

9.9 years15.2 years12.7 years

Bull CaseBear CaseBase Case

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Per capita income

1 0 7 1

1 2 9 1

1 5 3 5

9 1 9

0 2 0 0 0 4 0 0 0 6 0 0 0 8 0 0 0 1 0 0 0 0 1 2 0 0 0 1 4 0 0 0 1 6 0 0 0 1 8 0 0 0

1 9 9 0 - 9 1

1 9 9 5 - 9 6

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F igures in R u

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Poverty (BPL)

38%

22%

10%

15%

20%

25%

30%

35%

40%

1991 2006

People living

BPL

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I n c o m e l e v e l s o f In d i a n

65182

70226

26192

12836

13786

52657

7

9592

33874

16334

21824

34697

7

9696

49113

21267

37173

0

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< 4 5 K 4 5 K - 9 0 K 9 0 K - 1 3 5 K 1 3 5 K - 1 8 0 K 1 8 0 K