BRIC stands for fastest emerging economy countries India, Brazil, Russia and China.
While pushing India up the pecking order in the economies of tomorrow, Goldman Sachs, which separated from its Indian partner to strike out on its own in a country it bets could become the motor for the world economy has cautioned that political risk including a rise in protectionism, supply side constraints including business climate, education and labor market reforms and environmental degradation could slow down the economy growth than expected growth rate.
The higher growth rate under the new projections will have large implications for demand in the country. From 2007 to 2020, Indiaâ€™s per capita GDP in dollars will quadruple that is a third higher than the original BRICâ€™s projections. Indians will also consume about five times more cars and three times more crude oil as compared to 3.5 times more cars and 2.3 times more oil estimated earlier in 2003 by BRIC a research organization.
The new estimates are entirely possible. In some areas of corporate and structural reform, the country has used the current upswing to move at a faster rate than when the first study was done in 2003,
The researchers found that since 2003, there has been a structural increase in Indiaâ€™s potential growth to nearly 8% from 5%- 6% in the previous two decades.
Productivity growth has been the key driver behind the jump in GDP growth, contributing to nearly half of overall growth since 2003 compared with a contribution of roughly one-quarter in the 1980s and 1990s.
The restated optimism perched on a host of ifs and buts comes five weeks before finance minister presents the annual budget. The Indian finance minister is expected to simplify taxation, allow more room for foreigners in Indian industry and provide a boost to local businessmen expanding abroad. It is also expected to announce more spending on health and education as concern mounts that Indiaâ€™s pool of employable talent is fast draining out.
To embark upon its growth story, India will have to educate its children and its young people and it must do so in a hurry. Lack of education can be a critical constraint to the growth of the knowledge based IT sector, as well as in the move to mass employment in manufacturing. The demographic dividend may not materialize if India fails to educate its people
BRIC economiesâ€™ share of world growth could rise from 20% in 2003 to more than 40% in 2025.
Their total weight in the world economy would rise from about 10% in 2004 to more than 20% in 2025.
Between 2005 and 2015, over 800 million people in these countries will have crossed the annual income threshold of $3,000.
In 2025, it is calculated that approximately 200 million people in these economies will have annual incomes above $15,000.