An Indian Growth Story

India is emerging as a key economic superpower, buoyed by shifting demographics and increased interest in equity markets

Multinational services firm Deloitte have released a new report, indicating that India is poised to outperform China and other Asian countries as an economic superpower, thanks to its young population. According to Deloitte, India will drive the third great wave of Asia’s growth, with a potential workforce set to climb from 885 million to 1.08 billion people in the next 20 years, and maintain above that for 50 years. India will account for more than half of the increase in Asia’s workforce in the coming decade alone.

This demographic shift may have large implications for businesses, especially considering there is an increased share of women entering the workforce. By extension, India could be one of the best nations on earth to invest in over the next half-century, as population growth rises, interest in equity markets grows and a more educated workforce pushes ahead.

The rise of the middle class is one of the key reasons behind India’s growth story. By 2020, India is projected to be the world’s third largest middle class consumer market behind China and the US. By 2030, India is likely to surpass both countries with consumer spending of nearly $13 trillion.

India has recently received praise from the World Bank. In its latest ‘Ease of Doing Business’ global rankings released October 31st 2017, the WB placed India in the top 100 (up from 130 last year). The institution predicts India could be a high middle-income economy in 30 years, and applauded its extraordinary achievement of quadrupling per capita income over the last 3 decades. WB CEO Kristalina Georgieva said that given India’s track record so far, she is in ‘no doubt’ that extreme poverty in India could be eradicated by 2022 — a date put forward by Prime Minister Narendra Modi

An interesting investment narrative is unfolding in India. Indian equity markets are still on an upward trend, mainly thanks to higher liquidity in the markets from domestic investment. Foreign institutional investors have actually been net sellers of Indian securities in August 2017, with an outflow of around Rs 15,000 crore, however, the domestic interest in equities is growing rapidly, which will help to boost equity markets further. Investors who are bullish on Indian stocks are likely to be proven right.

Patrick Jones


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