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India Forecasts 9% GDP Growth and $30 Billion in Overseas Investment in 2008

By Mike Caggeso
Associate Editor

Despite the rocky start forecasted in U.S. markets, analysts and government officials in India are calling for 9% GDP growth and $30 billion of overseas investment by the end of 2008.

Lehman Brothers Holdings Inc. (LEH) said India’s economy – the second-fastest growing major economy – is at the "take-off point" where consumer demand and business spending dovetail and propel more investment, Bloomberg reported.

Also, Prime Minister Manmohan Singh may permit overseas companies to build retail chains in the country, Bloomberg reported. Investors in Yum! Brands Inc. (YUM), and McDonald’s Corp. (MCD) have seen first-hand what opportunities await… if the business models are successfully tailored.

"India’s growth acceleration is not a flash in the pan," Robert Subbaraman, chief economist at Lehman Brothers Asia in Hong Kong, told Bloomberg. "A middle class is fast emerging, which is spurring demand as consumption and investment interact." 

Two other recent news items underscore Subbaraman’s analysis.

Mumbai-based (and appropriately named) Indiabulls Financial Services said yesterday (Monday) that it plans to raise $1 billion from overseas investors through convertible shares and bonds, Forbes reported. The company’s major shareholders – Goldman Sachs Group Inc. (GS), Morgan Stanley (MS) and Merrill Lynch & Co. Inc. (MER) – certainly aren’t lightweights, and each has been visibly investing farther away from the wilting U.S. economy.

Also, India’s largest bank by assets, State Bank of India, announced yesterday that it was considering raising $4.2 billion by selling stocks to shareholders and employees, Bloomberg reported.  

[Editor's Note: To read Money Morning's "Outlook 2008" series piece on India in today's issue, please click here.]

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Read more on Investing in India, US GDP Growth at Wikinvest
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