Surprises in Indian Economy -2019
- The politics of populism fails to have as much impact as before as the electorate realises these are short term measures and states move towards development focus to win the electorate. Cash transfers to poor rather loan waiver takes precedence.
- The BJP makes it to power with difficulty and depends on regional parties to stich a coalition reinforcing the classic adage of Indian Election - "Nobody knows how it cooks but it cooks".
- The impact of NBFC crisis. lack of credit and reducing effect of pay commission becomes evident in slow growth of discretionary consumption.
- Staples and/or FMCG (Fast moving consumer goods) e.g. soaps, biscuits etc continue to grow as the effect of general elections comes in as a positive.
- Most industries realise the need for capacity expansion - as they are currently running at near full capacity - thus making private sector capacity expansion (capex) a reality.
- Gross Capital formation and growth stays on track and increases gradually largely led by utilities, construction and manufacturing.
- New government announces new projects in infrastructure bringing to the forefront possibility of growth of engineering and infrastructure sectors.
- Exports sector IT, Pharma consolidate their competitiveness and a well performing US economy and receding fear of trade wars help them improve their bottom-lines.
- US economy continues to grow and US fed increases interest rates but lesser than expected leading to a strengthening dollar - however INR stays course and does not weaken beyond 72 to a dollar.
- GST process smoothens and is further rationalised. Govt collections on GST improve. States however push to impose state cess etc. to keep the tax structure complicated.
- Indian Space Research Organisation continues to make its mark and launches new satellites. India's neighbours become bases for ISRO to link its stateliness thereby providing South East Asia the benefits of remote sensing and space technology. Private sector participation in space technology becomes a reality.
- Metro in various cities in India makes a mark with at least 10 cities having a viable metro network. Largest 5 metropolitan cities reach a network of at least 50kms each with Delhi Metro crossing 400 kms in length and more than 275 operating metro stations. (Currently 236 stations are operational).
- At least 2 large IPOs on the Indian bourses give opportunities to investors to create wealth and participate in good quality growth business.
- Indian banks perform well as the NPAs are recovered and interest rates remain low and the lending cycle picks up making them more efficient and valuable.
- Volatility in stock markets remain high as retail money participation reduces due to weak returns in 2018 and FIIs remain cautious due to high valuations.
- Real estate sector - housing market shows signs to recovery as debt of builders gets reduced and they industry is consolidated further. Recovery however is slow and very selective.
- Brick and mortar retail sales - Malls grow their business due to favourable policy, better infrastructure and lack of private equity support to e commerce.
- However consolidation of content and e commerce takes place with Reliance leading by launching its E-commerce business.
- General view on the economy stays positive even as Oil shocks - sudden spurs in Oil prices - keep the central bank, the govt and investors on their toes.
(Not to solicit any business, promote any business interest and for general information only.)
