Templeton Sees India Growing at 10% Shortly

Mark Mobius, Executive Chairman, Templeton Emerging MarketsGroup, is positive on India and believes the Indian economy is on a strong footing. “I can see India growing at 10% in the next few years if reforms continue to kick in,” he said in an interview with Business Standard. “We have  $2 billion plus investments in India and we want to increase it,” he added.

Mark Mobius

Mark Mobius

Excerpts from the interview below:

The  investment sectors of interest in India:  “Given the fact that the country is growing and with the on-going reforms, banking is the obvious selection to begin with. And some of the conglomerates, companies that are involved in a number of sectors and getting a wider exposure of the markets will be another area. We also like technology and pharmaceuticals. We have a mix of both public and private bank stocks in our India portfolio.”

Two years of Modi’s Government:  “The emphasis of the Modi government on the low income segment of the population is very good. I believe it not just a populist move but is also a key element in making the Indian economy healthy because you are creating a whole new generation of consumers and people who are becoming more productive. The Modi government’s emphasis on empowerment rather than hand-outs is very good.”

U.S. Federal Reserve is  expected to increase rates; trajectory down in India; FIIs pulling money out of Indian debt. How do you see things playing out?:  “This trend will continue. As long as you continue the reforms of the financial system in India and make it more transparent and efficient then rates will come down. If you see a more efficient productive society with less restrictions, your inflation will come down and interest rates will fall. This should have been done a long time ago. The emphasis of the government on the less fortunate segments of the society is very critical. The fixed income side will see some impact.”

Whether GDP growth of 8% is possible in India:  “It (8% growth) is quite possible. I can see India growing at 10% in the next few years if reforms continue to kick in. I believe the numbers are reasonably accurate, give or take half a per cent.”

 

 

 

 

June 6, 2016   No Comments

India’s Parliamentary Panel Approves Overhauling Bankruptcy Regulations

Taking a key reform measure to improve ease of doing business, a parliamentary panel in India approved a bill to update outdated bankruptcy regulations. The panel proposed that the Insolvency and Bankruptcy Code should include laws to seize overseas assets of defaulting companies and individuals. The legislation, which will make it easier to wind up a dying company or recover dues from a defaulter, could be passed in the current session of parliament that ends on May 13, Finance Minister Arun Jaitley said.

Parliament of India

Parliament of India

World Bank data shows that creditors in India recover about 25.7 cents on the dollar in the 4.3 years it takes to resolve insolvency compared with 80.4 cents in the U.S. in less than half that time, which deters lending and investment, reports Bloomberg. The panel has also suggested that apart from banks, the state- owned Life Insurance Corporation and Infrastructure Development Finance Company be included in the list of lenders.

The legislation proposes:

  • an insolvency regulator
  • procedures for early identification of financial distress in companies, and
  • time-lines for their revival or shutting down

Insolvency issues are to be dealt with in a time frame of 3 to 9 months.

Among other measures to recover bad loans, India is planning to change rules, allowing debt recovery tribunals to limit cases to two hearings and give a ruling within 30 days of the final hearing.

May 3, 2016   No Comments

World Bank Chief Economist: Indian Economy Doing Well

In an interview with the Economic Times, Professor Kaushik Basu, chief economist of World Bank remarked, “If you look at the growth table of performance among big economies all over the world, India, today in our World Bank table, tops the chart and this has never happened before. So overall the economic situation is good.”

Kaushik Basu

Kaushik Basu

However, with the global scene taking a turn for the worst, he cautioned that reforms and policy vigilance was very important. “There are risks to global growth. It can slowdown more and if that happens it is bound to affect India because today no country is isolated. But the main sector where India has to pay a lot of attention is India’s export sector where India has not done well despite the fact that India is the fastest growing major economy in the world… and a lot of attention ought to get this back again to full steam.”

April 4, 2016   No Comments

World Bank Projects India Will Be the Fastest-Growing Economy until 2018

The Wall Street Journal reports on the new forecasts from the World Bank which says that India is “well positioned to withstand near-term headwinds and volatility in global financial markets” compared with other major emerging economies and predicts it will grow at 7.9% by 2018.

That would make it the fastest-growing developing-country economy by some margin, ahead of the next quickest, Bangladesh, at 6.8% and China at 6.5%, according to the latest  Global Economic Perspectives report published by the bank.

Table below from World Bank Group 2016. Global Economic Prospects, January 2016: Spillovers amid Weak Growth. Washington D.C.

Country

2013

2014

2015 estimate 2016 forecast 2017 forecast 2018 forecast
World

2.4

0.6

2.4

2.9

3.1

3.1

U.S.

1.5

2.4

2.5

2.7

2.4

2.2

Euro Area

-0.2

0.9

1.5

1.7

1.7

1.6

Japan

1.6

-0.1

0.8

1.3

0.9

1.3

United Kingdom

2.2

2.9

2.4

2.4

2.2

2.1

Russia

1.3

0.6

-3.8

-0.7

1.3

1.5

China

7.7

7.3

6.9

6.7

6.5

6.5

Indonesia

5.6

5

4.7

5.3

5.5

5.5

Thailand

2.8

0.9

2.5

2

2.4

2.7

Kazakhstan

6

4.4

0.9

1.1

3.3

3.4

Turkey

4.2

2.9

4.2

3.5

3.5

3.4

Romania

3.5

2.8

3.6

3.9

4.1

4

Brazil

3

0.1

-3.7

-2.5

1.4

1.5

Mexico

1.4

2.3

2.5

2.8

3

3.2

Colombia

4.9

4.6

3.1

3

3.3

3.5

Egypt

2.1

2.2

4.2

3.8

4.4

4.8

Iran

-1.9

4.3

1.9

5.8

6.7

6

Algeria

2.8

3.8

2.8

3.9

4

3.8

India

6.9

7.3

7.3

7.8

7.9

7.9

Pakistan

4.4

4.7

5.5

5.5

5.4

5.4

Bangladesh

6.1

6.5

6.5

6.7

6.8

6.8

South Africa

2.2

1.5

1.3

1.4

1.6

1.6

Nigeria

5.4

6.3

3.3

4.6

5.3

5.3

Angola

6.8

3.9

3

3.3

3.8

3.8

The World Bank said India would benefit because of a reduction in external vulnerabilities, a strengthening domestic business cycle and a supportive policy environment.

 

January 17, 2016   No Comments

India Bucks Slowdown Trend in Emerging Markets

In a new policy research note ‘Slowdown in Emerging Markets: Rough Patch or Prolonged Weakness?’ the World Bank noted that “growth in BRICS, with the exception of India, has been slowing significantly after 2010. These slowdowns are expected to continue over the near term.”

Emerging market growth has been fading steadily since 2010, slipping from an average 7.6 per cent in 2010 to a projected less than 4 percent this year. Some of the contributing factors have been weak international trade, slowing capital flows and slumping commodity prices, external challenges which have compounded domestic problems including blunted productivity and bouts of political uncertainty, the report added.

The World Bank said that while many emerging markets have implemented reforms in specific areas, a few have announced comprehensive structural reform plans, including China, India, and Mexico. India formally adopted inflation targeting in 2015, thus strengthening the credibility of the central bank, reduced barriers to FDI in insurance, telecommunications, railways, and retail, eliminated diesel subsidies while raising excise duties on petroleum and diesel fuel, approved the introduction of a harmonized goods and services tax, and committed to increasing public investment, it noted reports SiliconIndia News,

December 11, 2015   No Comments