It's too late to catch the China wave, but another big opportunity is showing promise
To see the transformation of modern India, you should start with a look at an unconventional place – a slum. "If you go to a slum in Brazil you will feel endangered," says Ketan Patel. "If you go to a slum in India, you won't feel threatened because everyone is working. It may only be sorting garbage - it's a horrible job but you are so hungry for work you will take the opportunity, or if it's the next step up you are sewing bags together."
A slum may be a pit of poverty and disadvantage, but an Indian one isn't a life sentence; it's a way station, "a parking lot for human beings", as Patel puts it. And the movement of traffic through the parking lot is speeding up as India starts to deliver on its potential and opportunity widens.
Patel invites us to take a closer look beneath the bits of corrugated iron that maybe five or eight people call home: "The most educated person in the family is probably your 12-year-old daughter. Your boys are also going to school [thanks to a national drive to improve school access] but the girls are probably picking it up faster", a syndrome not unknown in Australia, either. "When you get just enough money to get a tiny abode on the edge of the city, you buy it. Now you are transformed from rural peasantry and you have a small abode in the city."
"It's an informal process to transform people's lives and that's what's driving the curve of India's GDP upwards," says Patel, an ethnic Indian who knows something about grasping opportunity. He grew up in an immigrant family in a poor part of London and is now a strategist and investor who has the rare distinction of having advised China's Xi Jinping as well as India's Narendra Modi on economic strategy.
Over the next 10 years, the pursuit of opportunity will drive a mighty urbanisation. The proportion of Indians living in the cities "was 40 per cent, it's heading to 50 per cent and in the next decade you will see 60 per cent", predicts Patel.
Australians have seen this pattern before. The urbanisation of China together with widening economic opportunity drove its transformation. Now India is following. As a result, Patel tells me, "it's almost as if every industry is transforming. At first glance you won't see it because you'll see all these people and chaos but if you look under the hood, you will see how fast it's changing".
India's total economic output as measured by GDP was about the same as Australia's in 2013. Next year Australia's is expected to be around $US1.4 trillion ($1.9 trillion). India's is projected to be around $US3 trillion, double Australia's. The gap is only going to accelerate.
Australia's Ashok Jacob, long-time financial confidant to the Packer family and now chairman of funds manager Ellerston Capital, says that India has annual economic growth rates of 6 to 7 per cent "locked in and if the chaos in India fades a little it will be 7 to 8 per cent".
"It's a long-term growth story," says Jacob, also chair of the federal government's Australia-India Council. "We are trying to tell Australian business, 'you guys need to lean in to India. Every industry in India will increase its sales by 10 per cent a year over the next decade.
"If just 1 per cent of your business is in India, in a couple of years it will be 2 per cent and in a few more years it will be 10 per cent," he tells me. "If we're thinking about going to China, it's too late, we've missed China. India is the opportunity."
India's transformation began with an early liberalisation program beginning in 1991, but it faltered badly. The advent of Prime Minister Modi, who is due for re-election next year, has put new energy into the process. Among other measures, he has brought 300 million people into the formal financial system by enabling them to have bank accounts, and he has tried to purge corrupt gains with a radical demonetisation scheme. He introduced a GST and new bankruptcy law, and wants to see more women participating in the economy.