5 Ways In Which India Can Focus on Per Capita Income

India’s emerging leadership in GDP is assured as of now, based on its stable political leadership under PM Narendra Modi, balanced economic policies and its unassailable population size resulting in an unbeatable demographic dividend. India will surely march on to become the third largest economy overtaking Japan and Germany, as those developed countries are now within striking distance. While overtaking these long-term leaders is commendable, our real focus should now shift more on improving our per capita GDP as only then will our per capita income increase substantially.

As per IMF estimates for 2025, India ranks only 119 in per capita GDP among all nations. But we should not be discouraged by this metric, as many nations ahead of us are too small in population and with too high resources like oil, to be of any meaningful comparison with a huge nation like ours. The perfect example is the 11th largest oil producer Norway with less than 1/250th of our population! But we should be concerned about another list, which is the list of the world’s top economies by absolute or nominal GDP. This is the list where we now occupy a place of pride of 5th rank, and now on the cusp of overtaking Japan and then Germany, to reach the 3rd rank. But in this list, despite our current 5th rank, countries with ranks up to the 34th position rank much higher than us when it comes to per capita GDP.

This is why India, with its vast population and a dynamic economy, is now standing at a crucial juncture, facing formidable challenges in enhancing its per capita GDP and income. The headwinds include the need for an even higher economic growth to match our population, global economic slowdown, inflationary pressures, stubbornly high interest rates, and now AI driven disruptions, as well as reciprocal tariffs from our major trading partner, the United States. To counter these challenges and achieve long-term economic prosperity for its vast population, India can adopt many innovative, unconventional, and creative approaches in key sectors. Here are 5 of them:

1) Tackle Reciprocal Tariffs

Most nations including India and China will have to modify their import tariffs, owing to the pressure from President Trump. In many sectors, this may be beneficial too for India, especially where the optics of unnecessarily high tariffs (70-100% or more) harmed us rather than benefited us. But in other sectors, especially where our import tariffs are internationally competitive (but maybe higher than that of the US), we should remind the US that higher import tariffs in developing economies vis-a-vis developed nations, has never been a charity, but a sustainable way for the whole world to be developed, which would only benefit the US immensely and not harm it a bit. At the same time, we should also be rationalizing our import tariffs to be at least globally competitive. India has already kickstarted this process. The strategy should be to align ourselves with tariffs in comparable countries, so that we will remain a competitive destination for global commerce.

2) Strengthen Bilateral Agreements

Many people think the US President is unduly worried about BRICS nations creating a currency of their own. Why should he be worried over something that even the EU couldn’t pull off with the Euro, despite earnest efforts? In fact, he is not worrying as much as he should in this regard. Huge bilateral agreements between major countries are surely threatening US supremacy in trade. The best example is how India deftly maneuvered necessary trading arrangements with Russia and Iran. China too is doing the same with more nations and at a much larger scale. This is why former US President Biden remarked that the BRICS nations have placed a gun on America’s head. President Trump is too macho to concede that, and claims that he is the one who has now placed a barrel on BRICS - 100% tariff if they even think of de-dollarization. But the fact of the matter is de-dollarization is already happening in a big way, by not promoting an alternative to the dollar, but by forging huge bilateral deals. This focus should be strengthened at any cost.

3) Health is Wealth, Really

The healthcare world is witnessing a tumultuous shift - from reactive treatments to proactive prevention. Major global studies done in this regard estimate that by 2040, preventive healthcare industry would have overtaken reactive healthcare industry (the current medical setup) 60% to 40%. Preventive healthcare bases itself on healthy lifestyle modifications across diet, exercise, sleep, stress management etc, and is perfected by tools like genetic testing. If there is one nation that can claim to be the ancient capital of preventive medicine, it is none other than India. We can prove that a healthy nation is the really wealthy nation. This is the land of Ayurveda and Yoga, which pioneered the supreme importance of lifestyle (pathya), the gut microbiome, the science of breathing (pranayama) )and the importance of physical and mental discipline. But we need to move faster for the clinical validation of such ancient sciences, as well as in growing India as the ultimate preventive medicine destination. 

4) Remove Bottlenecks

India is not only the world’s most populous, but its largest democracy too. This twin advantage can however also play to our disadvantage by creating bottlenecks in everything from traffic to logistics to environment to governance. For instance, a robust public transportation system can unlock billions in economic gains through reduced congestion, lower fuel consumption, and enhanced worker productivity. Investing in cutting-edge transportation systems like high speed trains and hyperloop can revolutionize long-distance travel, reducing travel time, business inefficiencies, fuel wastage and carbon emissions, thereby indirectly boosting productivity and GDP. Even more is the impact of removing bottlenecks in the logistics sector, which can help everyone from farmers to consumers to corporates. Bottlenecks in the environmental sector contribute to environmental degradation which has economic consequences, from healthcare costs to reduced worker productivity. Removal of such bottlenecks will transform air and water quality into serious economic catalysts. A cleaner environment can surely translate into economic growth.

5) Leveraging AI, the Right Way

As things stand now, AI may evaporate lakhs of existing jobs across the world, including in India too. But what if it can create millions of new, higher paying, socially transformative jobs? This is possible only if AI is leveraged the right way by using it to address our pressing problems first - in education, in healthcare, in transportation, in logistics, in environmental protection and more. For example, the next generation of AI, often called Agentic AI in contrast to the current Generative AI, will be capable of teaching and training students and employees at all levels, in a truly personalized way. Different students may face varied difficulties in grasping a particular topic, but what if an Agentic AI program can generate educational content on the go, finetuning itself to the needs of each student for each topic? Millions of students and workforces across the world would be customers to such AI based online EdTech. India with its massive software engineering talent pool is holding a massive advantage in creating such tools that can prove to be India’s unique resource to usher in prosperity.

How Stock Market Can Make All Indians Rich

This year India marked the 33rd anniversary of the economic liberalisation program that changed India’s growth trajectory forever. It was on July 24, 1991, that Dr. Manmohan Singh, the then finance minister, presented the landmark budget that ended the licence raj and ushered in the fresh air of economic growth through a never before attempted liberalised framework.

In the months running up to that momentous budget, the BSE Sensex was hovering around 770 levels, and recently it had almost reached an All Time High of 86,000. This translates to more than 100X wealth creation within these last 33 years, just on the basis of this large cap index. But the real total wealth creation by India Inc has been much higher.

To understand this, we just have to look at listed Indian companies’ market capitalization then, and now. Before 1991’s liberalisation launch, India’s total market cap was just around Rs 1 lakh crore. Today it stands in excess of $5 trillion, or more than Rs 400 lakh crore, which translates to at least a 400X wealth creation by Indian listed companies during these 33 years.

In fact, India has become one among the only five nations or markets in the world that have surpassed this $5 trillion mark. Previously, only the US, China, Japan & Hong Kong have achieved this feat. But when it comes to per capita incomes and living standards, India still has a long way to go compared with these other nations / regions.

But this is something that shouldn’t discourage us, as India’s socio-economic challenges are much bigger than any of these nations or regions. India has a much bigger population than Japan or Hong Kong and far fewer natural resources than the US or China. Besides this, India has to work things out in the framework of a democracy unlike autocratic China or a two-party democracy like the US.

However, our world-beating population as well as our vibrant democratic norms can be put to good use, if only we start thinking innovatively - maybe like how no nation has ever done before - for uplifting the living standards of all Indians, or at least for all Indians who are in dire need of it, by leveraging the wealth creation potential of our own equity market.

Even with the dramatic rise in indices like Sensex and Nifty, and the even higher rise in Midcap and Smallcap indices, only around 10% of Indians have a demat account to invest directly into stocks. Mutual Funds in India have been on a high growth trajectory since the 2009 World Economic Crisis and the stock market rout, but still there are only a little over 3% of Indians who have invested in mutual funds.

Interestingly, India is perhaps the only country in the world where there are more demat account holders than mutual fund holders! This is attributed to two aspects - one, the relative immaturity and under penetration of the mutual fund industry, and two, the affinity for India’s upper class segments to invest directly into stocks. 

But this will change eventually as more and more Indians realise that equity investing is best left to professional investment firms like mutual funds. But whether this happens or not shouldn’t concern us, as the pressing need of the hour is to bring the benefits of equity market investing to more and more people who need it the most.

As a first step towards this, just like how Jan Dhan bank accounts were started for over 50 crore Indians for direct benefits transfer and other facilities, there needs to be a mechanism whereby crores of needy Indians are gifted with mutual fund accounts. These can be zero-cost demat accounts, provided there is enough depth and variety in Exchange Traded Funds (ETFs) and/or if more fund houses support storing mutual funds in demat accounts.

Since both these scenarios are not yet here on a sensible scale, the more popular mode of mutual fund investing, that is through folios, can be relied upon for this purpose. All mutual fund houses, especially those MFs promoted by public sector entities like SBI, other PSU banks, LIC etc can be asked to take the lead in this exercise.

If you are still wondering where the actual investments would come, the answer is simple. The Central Government has been paying Rs 6000 per year to each landholding farming family in India, since 2018 as income support under the PM-Kisan scheme. Similarly, many state governments have been paying various kinds of pensions to economically weaker sections of the people, like senior citizens, widows, disabled people etc, which are often much higher or comparable to the farmer payouts.

If the central and state governments can come together to provide at least Rs 500 as a monthly assistance to needy families for their savings by investing into mutual fund SIPs, that alone can elevate the Indian living standards into developed nation territory, as a monthly Rs 500 investment into an average performing mutual fund SIP of 15% CAGR would create a corpus of over 1.5 crore rupees for each family within a 40 year period, which is the most crucial time frame for families as a young couple moves from their 20s to their 60s.

The beneficiaries of such a savings payout can be limited by the same mechanisms used to limit the farmer payouts, like limiting it to non income-tax payees, non-employees of government & public sector, non-holders of constitutional posts etc. But at the same time, all citizens should be encouraged to take part in such a scheme, from their own pockets.

Such a move would also bring in unprecedented inflows into the Indian corporates, which would be flush with capital for not only competing effectively with global majors, but for lessening our dependence on overseas capital and for scaling up our production and service capabilities for the whole world, and in the process creating higher paying jobs for the next generations of Indians.

While the Indian market may appear overvalued for now with the market-cap to GDP ratio crossing the 100% mark, two things offer comfort for the long term growth prospects of our equity markets - one, there are equity markets like that of the US that is trading at over 155%, and two, we are the nation that is growing the denominator of this ratio, that is the GDP, faster than any other, for now.

JSSAHER’s Innovative Strides in Higher Education

Dr B Suresh, Pro Chancellor, JSSAHER

Mysuru headquartered leading deemed-to-be university, JSS Academy of Higher Education & Research (JSSAHER) is taking giant strides to push innovation in everything it does. From nationally recognized research labs to world renowned faculty members to playing host to coveted international scientific conferences to startup incubation to constant upgradation of infrastructure and facilities, JSSAHER is not leaving a stone unturned in its quest to stay ahead of the curve among health and life science universities in the country. JSSAHER’s visionary leadership includes JSS Mahavidyapeetha’s Head Sri Shivarathri Deshikendra Swamiji of Suttur Mutt, JSS Mahavidyapeetha’s Executive Secretary C.G. Betsurmath, JSSAHER’s Pro-Chancellor Dr. B. Suresh and its Vice-chancellor Dr. Surinder Singh.

With over 1,61,000 members, the American College of Physicians (ACP) is undoubtedly the largest medical-specialty organization in the United States. In other words, it is the largest and the most esteemed professional group of doctors who are internists or physicians who are practitioners of internal medicine or general medicine as it is commonly called today. Research students even in India, even if they have not heard of ACP, must have surely heard of the weekly research publication, ‘Annals of Internal Medicine’, which is ACP’s core research journal, the highest ranked & cited journal for internal medicine, and regarded as one of the top five medical journals worldwide.

ACP selects and awards internal medicine specialists for a few key achievements in their work annually. In 2023 too ACP announced these annual awards, and the American College of Physicians Distinguished Mentor Award in 2023 was bagged by Dr. M Suresh Babu, who serves as Professor of Medicine, JSS Medical College & Hospital, JSSAHER, Mysuru. While giving away the award, the American College of Physicians noted that this award is in recognition of his outstanding mentorship in the field of clinical medicine. Dr. Suresh Babu is also a Fellow of the Royal College of Physicians, Edinburgh, UK. With such distinguished practitioners and researchers in its fold, it is no wonder that both JSSAHER’s medical college and hospital have been thriving as leaders in research and clinical practice.

Recently, the JSS Medical College also received a special recognition from the Government of India’s Indian Council of Medical Research (ICMR). This happened when JSS Medical College’s Centre of Excellence in Molecular Biology and Regenerative Medicine (CEMR) at the Department of Biochemistry was recently recognised by ICMR as an ICMR-Collaborating Centre of Excellence (CCoE). While bestowing this recognition on CEMR for a period of five years, ICMR noted that this is in consideration of its scientific accomplishments.

Dr. Prashanth Vishwanath, JSSAHER’s Dean of Research and Dr. Akila Prashanth, Professor and Head of the Department of Biochemistry, received the recognition from Dr. Rajiv Bahlat, the Director General of ICMR, at the ICMR headquarters in New Delhi recently. As an ICMR-CCoE, this JSSAHER unit will engage in extensive cooperation with ICMR to develop guidelines, undertake multi-centric projects, and enhance capacity building efforts in the country. The available resources in such centers will be shared with other centers for the purpose of student training, R&D, and capacity development for enhancing the national research talent pool for advancing medical research in India.

A prime advantage of studying at JSSAHER is the unique exposure students get from the depth and breadth of the international conferences it hosts. A recent example was the HEAL-BioTec 2023 hosted by the JSS School Of Life Sciences. This three-day International Conference on ‘One Health: Biotechnology as a Catalyst for Sustainable Development was organized by the Department of Biotechnology and Bioinformatics, JSSAHER. This conference was funded by three Indian Government bodies including the Department of Science and Technology (DST), the Science and Engineering Research Board (DST-SERB) and the Department of Biotechnology (DBT), and it achieved its objective to discuss and further the new concept of ‘One Health’ which serves as a catalyst for achieving the Sustainable Development Goals (SDGs) by 2030.

Also included in the G20 agenda, the ‘One Health’ approach aims to improve disease management by bringing together health, food and environmental scientists as well as policy specialists from different parts of the globe, to help in achieving SDGs by this decade’s end. It was a never before opportunity for JSSAHER students, faculty members, and researchers to interact with world renowned experts in these contributing domains and gain integrated knowledge about the One Health approach. Sanjay Kumar Varshney, Advisor & Head, International Collaborations, Department of Science & Technology (DST), Govt. of India, was the chief guest and delivered the keynote address that described how Artificial Intelligence is speeding up clinical trials among other aspects.

Dr. Hans Jorgensen, Professor, University of Copenhagen, Denmark, who was the guest of honor, delivered a plenary lecture, with another plenary lecture by Dr. Anil Kaul from Oklahoma, USA. Other eminent scientists who delivered invited lectures include Dr. Jung-Hyun Kim (South Korea), Dr. Raj Kumar (Boston, USA), Dr. Claus Bang-Berthelsen (Denmark), Dr. S. Pradeep Kumar of Google and Dr. Manju Bansal from IISc. Apart from research scholars, faculty members and students, the attendees included leading industrialists from concerned sectors. Hosted both physically and in online mode, the mega conference benefitted at least 500 students directly, apart from the thousands of viewers who tuned into it from the world over.

During the last two quarters itself, the students, faculty and researchers of JSSAHER have been blessed with the university hosting several such events. These included an international conference on the genetics & epigenetics of cancer, a two day fair on forensic and investigative science, a live hysteroscopy workshop for gynecologists & postgraduate students, an international conclave on the occurrence and prevention of tuberculosis, and a rally to educate people on the importance of adult immunization especially for the elderly and high risk patients, conducted by JSSAHER’s Adult Immunization and Travel Medicine Center.

JSSAHER also continued to fortify its already impressive facilities and infrastructure in its core School of Life Sciences at Mysuru. During the last quarter, the deemed university launched the School’s new Lecture Hall Complex with the inauguration done by Karnataka’s Minister for Medical Education, Sharan Prakash Patil. The School of Life Sciences offers 14 post graduate programs, 6 undergraduate programs and 2 diploma courses in the regular stream, as well as several courses in the Open & Distance Learning (ODL) mode.

During the occasion, Minister Sharan Prakash Patil also inaugurated the University’s incubation facility named ‘Sparkle Cine’ for boosting the start-up initiatives by students, faculty and interested entrepreneurs. Sparkle Cine has been active for some quarters now, but now it gets its own infrastructure and facilities, towards fulfilling its stated aim of furthering the start-up culture in the university by translating educational excellence into actionable ideas for entrepreneurship and innovations. Also launched during the event was a new pharmaceutical chemistry lab.

Over the almost one and a half decade of its existence, JSSAHER has steadily improved not only on the quality front, but on the volume of graduates and postgraduates it grooms in each batch. Last quarter was witness to this phenomenon once again, during the fourteenth convocation of JSSAHER. All together, 2,546 graduands were awarded their undergraduate, postgraduate & diplomas this year, apart from 49 candidates who were awarded PhD degrees. Chairman of UGC Prof. Mamidala Jagadesh Kumar was the chief guest who delivered the convocation address and gave away medals to 55 academic toppers.

Lessons to Indian Investors From Munger's Market Beating Run for 45 Years

Finally it happened. Jerome Powell backed off from destroying the American economy and the world economy further by not only pausing from an interest hike yet again, but by hinting that 2024 might witness up to three rate cuts.

It was the perfect excuse that the Indian markets needed to move even further up. Our nation already had structural strengths due to the ongoing economic reforms and infra push, plus the booming mutual fund inflows, and this move by the US Fed is surely a long-term positive.

Did someone mention long-term just now? Yes, and it was intentional, as there is now a chorus that the market will only go up and up. A little more conscientious souls are saying that only the large-caps may move up now, and not the mid or small caps, which are way too heated up already.

But this too has become a chorus now, and every time such a chorus is emerging, beware, a correction might just be around the corner. A 10-15% correction is a healthy norm in a bull market, but it can catch most traders and investors on the wrong foot, as this time around it may involve Nifty diving down by over 3000 points and Sensex by over 10k.

In Warren Buffet’s words, yes, it is a time to be fearful. As the Oracle of Omaha said in near perfect words - “To be fearful when others are greedy and to be greedy only when others are fearful.” But such a dip too is sure to be bought in rapidly, giving you a fruitful opportunity to be greedy.

So, this kind of rapid buys against sharp falls is what the long-term qualifier is all about. And not that the markets will go only up and up. Of course, long-term has much more positive implications in the capital markets. Charlie Munger who passed away on November 28 was one of the best practitioners of it.

It is said that many of the quotes and wisdom that people attribute to Warren Buffett were actually from his long-term business partner Munger. One such quote where Munger likely had a great role was this - “Our favorite holding period is forever.” Such was his conviction about a unique advantage that only comes from the long-term holding of stocks - the power of compounding.

Compounding is no rocket science. At its heart, it is only middle school arithmetic. But 99% of investors in stocks and mutual funds do not get to reap its benefits. In fact, Munger excelled in it precisely because it was only basic math. Despite his towering intellectual capabilities - lawyer, architect, analyst, investment strategist, business head & thinker - he was careful to choose only simple generalized knowledge from the various domains.

Munger had a well-known disdain for specialists and their too specialized knowledge. His argument was that specialists tend to focus too much on their specialized knowledge, while ignoring what a multidisciplinary approach could have easily solved, by bringing together basic knowledge from all connected domains.

Anyway, compounding was one such basic skill that Buffett and Munger excelled in, that it won’t be an exaggeration to state that this strategy had more than a 50% role in their astounding success at Berkshire Hathaway which they together grew into the world’s largest holding company worth nearly $800 billion.

Munger’s appreciation for the power of compounding is evident from one of his best known quotes - "The big money is not in the buying and the selling, but in the waiting." Indeed, what he achieved for Berkshire Hathaway by way of compounding can never be overstated.

In fact, Munger’s strategies including his reliance on long-term compounding was central to Berkshire Hathaway shifting away from Buffett’s philosophy of investing in fair companies at wonderful prices (which he learned at Columbia University from his professor Benjamin Graham, the Father of Value Investing). 

Instead, Munger - who never attended any b-school unlike Buffett - convinced Buffett that what they should be doing is investing in wonderful companies at fair prices. Since this involved buying at higher prices than in value investing, it invariably required the power of compounding to work, and it proved to be so, as most of these companies proved to be really wonderful in the long-term! 

Buffett himself has gone to great lengths to credit Munger for this complete strategy shift and for creating a new blueprint for Berkshire, often saying that “it was Charlie who straightened me out” and that “listening to Charlie has paid off.”

Between 1978 and 2023, that is, for 45 long years, Berkshire Hathaway grew investors’ wealth at a compounded annual growth rate (CAGR) of 20%. Most people don’t readily realize what this achieved for their public shareholders - it multiplied their wealth by 3700 times within these 45 years!  

It is a feat never done before and never likely to be done again in the future. This is especially so as despite this intervening period being witness to America’s largest ever economic growth, that sent its benchmark S&P 500 index over the roof at 163 times wealth creation, Berkshire Hathaway’s performance beat even this superlative returns by nearly 23 times!

So, what exactly is this power of compounding in layman terms? It would be best to describe it with an example. Suppose you have Rs.10 lakhs to invest in 2023. And you invest all that in a stock priced at Rs.50, after a careful study. So you get 20,000 shares.

For this stock to double your wealth, it has to go to Rs. 100 or go up by 100%. Suppose it does that within a year or two. So now you have doubled your wealth to Rs. 20 lakhs. Now, to triple your wealth you know the stock has to triple in value, that is, become Rs. 150 per share. But do you know how much it has to grow now in percentage terms to reach Rs. 150 from Rs. 100? It has to grow only 50%, and it will triple your investment to Rs. 30 lakhs!

If it is an excellent stock in an excellent market, it will achieve that within the next year. So now you have tripled your wealth. You know that if it adds another Rs. 50 to its value, it will quadruple your wealth to Rs. 40 lakhs, that is increase it fourfold. But do you know how much that growth is in percentage terms - from Rs. 150 to Rs. 200? It is merely 33.33%! And similarly for your investment to grow fivefold - from Rs. 200 to Rs. 250 and from Rs. 40 lakhs to Rs. 50 lakhs - all it takes is a 25% up move, which can sometimes happen within a week!

Now suppose you were really fortunate that your chosen stock was one of the best growth stocks in the market, maybe within the top 1% of the best small caps, that becomes a 100X multibagger by 10 years, that is, by 2033. So now your Rs. 50 stock is trading at around Rs. 5000, and your Rs. 10 lakh investment is now worth Rs. 10 crore. What happens now is the real magic.

Do you realize how much your stock has to move up now for it to add one more times in return, that is to add one more 10 lakhs (your original investment), or in other words to move from 100X to 101X? If you are quick at arithmetic, yes, you guessed it right, it should just rise by 1%. Imagine, a stock moving up by merely 1%, and you adding one more times of your original investment to your wealth!

This is what the magic of compounding is all about. Do you think this is a far fetched idea? Absolutely not. Even in the Indian market, there are dozens of stocks that have done this within the last 10 to 20 years, and now with the kind of better quality companies and startups hitting the IPO street, there will be hundreds of companies achieving such feats in the 2023-33 period.

This is why Buffett and Munger always held seemingly boring stocks like Coca Cola and American Express in Berkshire’s long-term portfolio without ever divesting them. These stocks continue to be incredible wealth compounding machines for early investors like them, who have also used their high dividends to reinvest!

And this magic of compounding is what drove this remarkable duo to state counterintuitive stuff like, “Our favorite holding period is forever” and that "The big money is not in the buying and the selling, but in the waiting." It is a wisdom that runs diametrically opposite to the current trend of dangerous practices like only microseconds long algorithmic overtrading, futures & options and heavily leveraged bets.