If you go back to history and observe till the year 1878, India & China were the leading Economies of the World. Now with the beginning of this new decade of 2030, I feel history will repeat itself & this decade again will belong to India & China, unless we have World War- 3. We are bearish on the US, Japan & other European Countries keeping the year 2035 in mind. I believe the US dollar may be down by -40% till 2035. We advised our Investors to exit from $ in May 2020 & since then it is already down by – 11%. This ongoing decade will belong to China, India, Indonesia, Mexico as they will emerge as the leading countries of the World. Also some of the African countries, Vietnam, Korea & Taiwan will also do well going forward.
Specific to India, it will bounce back from GDP contraction of -9% in 2020 to 10 % + growth rate in fiscal year 2021-22. India had registered its worst GDP rate with -23% contraction in Q2 of CY 2020. However, that is history & now India may not be turning back to those numbers ever again. In today’s World, when Global debt is close to $ 277 trillion dollars (364% of Global GDP), India & China are the only two countries that can sustainably grow with 7% + GDP growth rate. Even if we compare both countries, then India may be in a favourable spot as post Covid-19, the world is looking for economic distancing from China.
In my view, it is a big opportunity for India to portray itself as a replacement for China as the ‘World factory’. India is the only Country in the world which has both democratic and demographic dividend, a rare combo which no other country can offer. In addition, India still has a very low labor rate, which is almost half of China or a one- tenth of any developed nation. Just a month back India has achieved a new benchmark of touching $ 500 billion FDI, which is remarkable by any standard. India has received around $30 billion during the first half of the current fiscal, which is a growth of 15 percent versus last year’s same period. Sectors that attracted the maximum foreign inflows during April-September 2020-21 are computer software and hardware ($17.55 billion), services ($2.25 billion), trading ($949 million), chemicals ($437 million) and automobile ($417 million). In my view, this number will keep growing & may touch a new high of $ 50 billion in FY 2021-22, as post-COVID-19, the entire world has anti-China sentiment, which will be favorable for the Indian economy in the ongoing decade of 2030.
Today we are living in a world where around $ 15 trillion is invested in negative interest rate bonds, which shows that the world is prepared for a long depressed rate of growth for the World Economy, where India is the only hope as this money can be deployed profitably in Indian Economy. India has a high GDP growth, political stability, democratic setup & demographic dividend Today money is almost free as it can be printed at free will of politicians & central government. This free money will always chase growth in those countries which has transparent political & economic structure & India has both advantages.
Just to conclude my view, I can say in today’s world India has the “TINA’ factor, i.e. there is no alternative. Hence, World Capital whether FDI or FII, they will continue to chase the Indian Economy as they will chase growth to get returns on their investment. Even in the pandemic year of 2020, India is the only emerging market where FIIs are net buyers of $ 9 billion for the calendar year, otherwise, in all other emerging markets like Indonesia, Korea, Taiwan, Malaysia they had been net sellers for CY 2020.
By Amit Jain, Chief Strategist – Global Asset Class, Ashika Group