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India is often touted as the next China — a similarly sized population is expected to offer vast potential, particularly coming from a low per capita usage of metals, energy and just about everything else.

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India just needs to be freed from bureaucracy and the shackles of its earlier obsession with socialism and it will boom, supporters have been saying for years.

Yet India’s growth has persistently fallen short of expectations, often to the dismay of Western firms investing billions in what they have hoped would be the next big thing.

It’s not that India isn’t growing. At 6.5%, it is almost certainly growing faster than China this year. Despite claims of “on target” 6.5% growth in China, a more realistic measure is probably 4.5%, according to Roger Bootle, chairman of Capital Economics, writing in the Telegraph.

Nevertheless, China has achieved an unprecedented rise in living standards, with perhaps the greatest achievement being the creation of a prosperous middle class numbering in the hundreds of millions.

It is this middle class that has allowed the switch from export-led to domestic consumption — without their combined demand auto sales, white goods and the construction sector (and the list goes on), it would be dead in the water.

India, by comparison, has a paltry middle class.

The top 1% of Indian adults, a rich enclave of just 8 million inhabitants making at least $20,000 a year, equates to roughly Hong Kong in terms of population and average income, The Economist says. The next 9% is akin to Central Europe, in the middle of the global wealth pack.

Even the top 1% would struggle on $20,000 per annum to afford $20,000 for a small BMW or over $1,000 for an iPhone.

The next 40% of India’s population neatly mirrors its combined South Asian poor neighbors, Bangladesh and Pakistan, hardly in the market at all for Western-priced brands. The remaining half-billion or so are on a par with the most destitute bits of Africa, explains a report in The Economist.

So why has India apparently failed where China succeeded?


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This development could bring some cheer to India’s Steel Authority of India Limited (SAIL), the state-run corporation that has a monopoly in the supply of railway tracks, and some of the domestic steel companies.

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India and Iran recently signed a deal worth U.S. $2 billion dollars for cooperation in the rail sector. The agreement included a Memorandum of Understanding (MoU) worth $600 million that will enable Iran to purchase locomotives and freight cars from India. The new trains in Iran will help transport passengers and freight in Iran.

What’s more, they will also be used in the Chabahar-Zahedan railroad to accelerate development of the Chabahar Port, which will eventually connect to Central Asia and, ultimately, Europe.

Iran had recently announced the launch of the construction of the Mashhad-Zahedan railway. This is part of the plan to connect Central Asia with the Iranian port of Chabahar on the Indian Ocean coast.