The Indian Economy Blog points to a commentary by chief Morgan Stanley economist Stephen Roach on India’s development. AsiaPundit has made no secret of his admiration of Roach, he is one of the more energetic of the big investment bank economists and not afraid to break from conventional wisdom. As Reuben notes, “in case you’re wondering why an article by Roach matters, you certainly are underestimating the man’s influence (for better or for worse) among the movers and shakers in finance and industry in the US.”

Here Roach notes one of the weaknesses of China’s boom - the absence of domestic demand - and discovers an opposite situation in India.:

The consumption story — the organic sustenance of sustainable growth and development — casts India in a very different light. Don’t get me wrong — the Indian consumer is hardly a powerful force on today’s global stage. As the accompanying chart shows, India’s per capita income and consumption levels are about half those of China’s. But it is growth at the margin that always drives powerful macro and market trends. And the Indian consumption story is, first and foremost, one of accelerating growth off a low base. The potential comes from the structure of the Indian economy: Private consumption currently accounts for 64% of Indian GDP — higher than shares in Europe (58%), Japan (55%), and especially China (42%). India’s transition to a 7% growth path in recent years is very much an outgrowth of the emerging consumerism of one of the world’s youngest populations. The increased vigor of private consumption provides a powerful leverage to the Indian growth dynamic that is rarely found in the externally-dependent developing world.

This came through loud and clear on my recent travels through India. Over a span of four days, I met with a number of corporate executives, investors, and senior government officials. Everywhere I went, the focus was on the Indian consumer. I met with the managements of a good cross-section of India’s major consumer companies — Hindustan Lever (softgoods), Pantaloon (retail), Raymond Textiles (clothing), and McDonald’s (fast food). I also spoke with executives from banks and drug companies — all of whom have important consumer businesses. And I met with leading industrial companies such as Reliance, where a major five-year initiative has just been announced for the development of nationwide chain of hyper-stores and super-markets. I even went to the Phoenix shopping mall in Mumbai, which was bustling with activity. I have made similar trips to malls in China. There was one key difference between these two experiences — the locals were buying in India. This is consistent with what I heard from most of the consumer companies I saw — solid acceleration in same-store sales comparisons over the past six months.

AsiaPundit has not yet visited India, although the differences between shopping centers in mainland China and elsewhere in East Asia are striking. The upscale shopping centers in Singapore, Seoul, Hong Kong, Tokyo and Kuala Lumpur are invariably packed with consumers. But in relatively wealthy Shanghai, upscale shopping centers such as Times Square and Grand Gateway are so empty it’s easy to forget you’re in Asia.

It took most of Asia’s developed economies decades to build a consumer culture - if India has built one before its major development spurt starts, it isn’t unreasonable to argue that leap-frogging is possible.

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