India – Resurgence of the Golden Bird Wednesday, Mar 01, 2023 by: Sundaram Alternatesposted in: PMS Articles This is a story we are all familiar with… In 1492, Christopher Columbus discovered America by accident. A lot of facts have now come to the fore depicting that he actually made landfall in the Bahamas and never really set foot in what is known as today’s America! He was in fact, en route to what he believed was a route to India but lost his way on the high seas. The fact that a country like India was so alluring to an Italian explorer and navigator, who staked everything on this journey, has seldom been discussed with equal fervor. Indeed, if you look back, India was the center of the world’s trade. India was the world’s leading exporter of perfumes, spices, food items, cotton, and precious stones – and had a thriving economy as far back as one would remember. It was fondly known as the “Sone ki Chidiya” (The Golden Bird) which attracted traders from all over the world. It is interesting to note that India’s dominance over world trade was a natural corollary to her being the world’s spiritual voice. From Scholars to astronomers, philosophers to astrologers, the list of India’s navigating world opinion on the issues of those times was always respected. There was a certain pride in being an Indian and it manifested itself across several cultures There is an uncanny similarity to the turn of events happening in our country over the last several years. One would find that there is a larger acceptance of India on the world stage, not just in terms of just the presence of the second most populous nation on earth, but also as a country that has its unique way of handling issues the world has been struggling with. Whether it is the digital transformation of the country’s payment infrastructure or the handling of a once-in-a-century crisis like COVID, India has shown that it can handle its issues independently and successfully. Simultaneously, the way we have handled geopolitical issues through the MEA, or managing our internal finances through the RBI, as a country we are no longer seeking external validation of our actions there is an air of quiet confidence and fearlessness as we go about our business. Even in sports, we are increasingly becoming more competitive on the global stage and starting to increase our medals tally with each successive event. This has not been lost on global trade which has been quick to spot the secular opportunity the country presents. Over the last 5 years, USD 363 billion of FDI money has come into the country, 101 unicorns were created and the number of companies seeking to move to a more +1 strategy has more than quadrupled India is currently the 5th largest stock market in terms of market cap in the world vs 10th from a decade ago, behind the USA, China, Japan, and Hong Kong. India is poised to become the world’s 3rd largest economy and stock market by the end of this decade. As per Morgan Stanley’s estimates, India will be one of the only three economies in the world which would generate more than USD 400 billion in annual economic output growth from 2023 onward, and this will rise to more than USD 500 billion from 2028. India’s next decade of growth would be very similar to China’s path of growth from 2007-2011. As we step into the next decade of India’s growth, there would be various factors that would act as catalysts for growth. Some of them like conducive government capital spending towards infrastructure, healthcare, financials, Production Linked Incentive (PLI) schemes, and the National Infrastructure pipeline are known. Rapid developments in technology are helping businesses scale up at a faster pace with 50% to 55% of e-commerce business coming from Tier II and Tier III cities, resulting in organized businesses seeing higher levels of penetration and growth. As credit growth, capacity utilization and private investments pick up, this will spur consumption and demand, and higher GDP growth in the coming years, leading to a revival in the capex cycle. In addition, there would be hitherto relatively less explored sectors that can do well, Tourism, both religious and medical, will take off with a simultaneous growth in supporting infrastructure. No doubt, there would be challenges to growth. Global recession or weak growth – with nearly 20% of India’s output exported would be one of the larger issues to look out for. Geopolitics events, a shortage of Skilled labor supply, and Commodity price increases could be serious challenges along the way. However, the new Indian mindset is already thinking ahead and creating its way to navigate through. India is now Free Trade Agreements (FTAs) with different countries, smoothening out geopolitical tensions. India’s ability to hold its own with all oil-producing nations across the globe is already reflecting in more predictable energy security leading to a more benign inflationary situation than the rest of the globe. Notwithstanding that, India is one of the largest ecosystems currently doing a pivot from fossil fuels to renewable energy which should further strengthen its position. India is at a point where China was 15 years ago in terms of per-capita income and working-age population, giving India a clear demographic advantage in terms of sustaining higher terminal growth rates. India’s private consumption is expected to more than double to USD 4.5 trillion by the end of this decade, similar in size to China in 2015. Having said that, India is focusing on a sustainable growth story born of its strengths and virtues, rather than ape an existing growth model. History has proved that any country which does not look at inclusive growth basis of its competitive advantages, would not have a secular run and would soon falter. This is where the India growth story is indeed different this time around. Like the proverbial Phoenix, India, the Golden Bird is on the rise like never before, to reclaim its past glory. We are indeed fortunate to be part of this paradigm shift and will have innumerable stories of scores of entrepreneurs and leaders who make this dream become a reality. Disclaimer: Securities investments are subject to market risks and there is no assurance or guarantee that the objective of the investments will be achieved. The statements contained herein may include statements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those expressed or implied in such statements.