The Indian economy took over 60 years from independence in 1947 to cross the $ 1 trillion GDP mark in the fiscal year to 31 March 2008. The next trillion is expected to be crossed before 31 March 2015. So why will the second trillion be crossed so much faster than the first? Because of compounding of growth at higher rates to 2015 compared to the first 60 years. Real GDP growth per annum was a mere 3.5% for three decades from 1950. It rose to 5.4% in the decade to 1990 and 5.9% in the next ten years to 2000. Our forecast for the decade to 2010 is 7.3% p.a. Going forward to 2015 real GDP growth should accelerate to over 7.5% p.a. as infrastructure is incrementally improved, albeit slowly, and the economy recovers to grow 8 - 9% from 2012. If average inflation of 5% p.a. is added to the real rate, a nominal GDP growth rate of about 12.5% pa will result in a doubling of the economy in about seven years using current USD/INR rates. We feel this is easily achievable and broadly follows the path of China, which started its reforms process 12 years before India. In China it took 50 years to cross the first $ 1 trillion mark in 1998, 6 years to reach the second trillion, 3 years to cross the third trillion and only 1 year to cross the fourth trillion in 2008. We believe the Indian economic journey will follow a similar path, although the pace may not be as scorching as China's. This is because there is a cost to India of having a democratic system, which needs consensus opinion to push through badly needed and tough policies. The frustratingly slow pace of this political process acts as a drag to higher economic growth.

Eoin Treacy's view India and China offer two very different models of development but share an acceptance that they must engage with the global economy if they are to raise hundreds of millions of people out of poverty. Both countries have made enormous strides on this front and the middle class is ballooning; creating demand for everything from infrastructure to cosmetics. The growth of the global middle class forms a primary pillar in the argument for investing in emerging markets.