BSE India total market capitalisation has crossed $4 trillion and its GDP is in striking distance of $4 trillion.
Indeed, a moment to celebrate. The real question now is how do we look at the future. How does India stack up against the world today?
India Stands Out
Global investors’ portfolios are divided into US, Europe, China, and emerging markets. Within emerging markets, India stands out in terms of growth, which is ahead of all other countries. India is a vibrant and very diverse country with different languages, food habits and investment patterns changing every hundred miles.
However, it takes the three important conditions for global investors’ point of view. One, political stability. Second, supportive policy reforms like GST and IBC. Third, very strong central bank and a banking system, stable currency and adequate liquidity.
India at this point of time is a classic example of, ‘Awakening to its potential.’
India at the moment unlike any other country provides the ‘5D advantage’.
5D ADVANTAGE
1 The number one being ‘Debt’, the general government gross debt as a percent age of GDP stands stable at around 82% which is over 100% for some developed countries.
2 Deglobalisation. The ‘China Plus One’ manufacturing focus is clearly playing out in India.
3 ‘Digitization’. This helps financialisation, formalisation and better efficiency.
4 ‘Deregulation’. Lower subsidies and multiple consistent reforms have helped India over the period of the last 5-10 years and
5 ‘Demographics’ with the highest share of younger population, all benefit of what we call the ‘5D advantage of India’.
The Opportunity
Over the coming decade, as India moves towards its $5 trillion GDP & beyond, multiple sectors would participate in this journey. The Indian government is rightly spending towards creating both hard and soft infrastructure thereby improving India’s competitiveness. Corporate tax is now on a par with or better than other Asian countries. India, with its large population and demographics, now provides a ready consumption market for all.
Some of the sectors that could lead growth would be banking, consumer discretionary including autos. IT and pharma too will continue to be secular sectors.
The ‘China Plus One’ strategy is in play for most investors and the deglobalisation trends are likely to result in India being a big beneficiary of industries moving away from China. We’ve already seen how India has gained importance in Apple’s long-term growth plans. Other beneficiary sectors would be chemical and, defense which will play out in the coming years is our belief. India’s likely to remain one of the fastest growing economies in the world and that gives us this great advantage.
It’s just the beginning
India is on the cusp of growing to become the third largest economy in the next 8-10 years. So should we look at the sensex at 70,000 and conclude or look forward to upcoming decades where India could become a $7 trillion economy.
(The writer is vice chairman & CEO, Mirae Asset Investment Managers)
