India's economic growth continues apace.

Much of what is being said currently about India in the international financial press would have even the sophisticated reader thinking that the country is on the verge of becoming the world's next great economic power.

Unquestionably, development of the Indian economy is moving in a favorable direction. A February 7, 2007 report distributed on the Bloomberg News wire comes with the headline, "India's Economic Growth May Hit Record 9.2 Percent This Year."

The story also comes with news that the expansion is broad-based-meaning that consumer demand has a major stake in supporting the growth by stimulating indigenous manufacturing and services. Bloomberg made the point that this is happening, "as the nation's burgeoning middle class buys more cars, washing machines and phones, driving manufacturing growth to an all-time high."

Not to take away anything from the obvious progress that India has made, but all of the coverage about the emergence of a genuine, consuming middle class masks the idea that in terms of per capita growth development is not that well advanced. Take a look at India's per capita income in the chart below.

In a 2003 monograph published by the Stanford Center for International Development, it was suggested that India could reduce its high rate of poverty to 21 percent by 2007. The above Bloomberg story, citing the World Bank as its source, said that currently half of India's population live below the poverty line.

In addition to the human suffering indicated by this level of poverty, the World Bank statistic suggests that complete development of the Indian economy will face enormous problems.

There are known difficulties with infrastructure. Electric power and roads are of particular concern. The government is at work on these areas, but the total amount of money that needs to be spent is certainly not in the budget. Even the sums that are in the budget threaten the country's fiscal well being. And consumers are currently facing the prospect of inflation.

In short, India's progress and growth are real, but so are its problems.

INDIA'S YOUNG, EDUCATED CONSUMER BASE IS A MAJOR ECONOMIC ADVANTAGE

The population growth rate for India is slightly below the regional average, due in part to a birth rate of 24 per thousand inhabitants, which is lower than the average of 25 per thousand for South Central Asia. Job creation has not kept up with growth of the labor force in recent years, and it is unlikely that the situation will improve further in 2007. Unemployment is running about 7.8 percent, and this continues to undermine consumer confidence.

India's population reached 1.1-billion people mid-2006, which amounted to just under 17 percent of the total world population of 6.6-billion inhabitants. According to data released by the Population Reference Bureau (PRB), India's population will reach 1.4-billion by 2025. Also, according to that source, India is going to have a population of 1.6-billion people in 2050.

The PRB revealed that a low 29 percent of India's population lived in urban areas during 2006, and that the country's population density is a comparatively high 884 people per square mile. India is roughly 15 percent bigger than Argentina in land area, but India has nearly 29 times as many inhabitants. The CIA's World Factbook, indicates that 31 percent of India's population was birth to 14 years old in 2005, while 65 percent was 15 to 64 years old, and 5 percent of the populace was 65 years of age and over.

CIA statistics revealed that the country's population growth rate was 1.38 percent in 2006. According to the United Nations Population Division, in the year 2050, 20 percent of India's population will be birth to 14 years old, while 59 percent will be aged 15 to 59, and 21 percent of the populace will be 60 years of age and over.