762

SPECIAL WRITE-UP

India – An Oasis in the desert!

CA. Nilesh Shah
Author is member of the Institute. He is Group President & Managing
Director, Kotak Mahindra AMC. He may be reached at [email protected]

increased from 2.6% to 3.2%. FDI investment share has increased

from 2% in 2014 to 7% today. If we have achieved so much even in
Rahu Kaal then you can imagine the kind of growth that we can
get in the next 25 years when Rahu Kaal is gone.
Over the years, our inflation has decreased from a high inflation
rate to a moderate one. If someone says that inflation in India is
the highest it’s been in 8 years, it’s important to note that it’s still
The Indian economy has lower than US inflation rates from the last 14 months. This used to
be higher than US inflation in the last 30 years. In the 90s, we had
grown tremendously to pledge gold because our forex reserves were so low. Today we
over the past few are amongst the top 5 forex holders in the world. Infrastructure
decades, and there is was very weak earlier. If someone had to go from Mumbai to Pune
no sign of it slowing earlier, it used to be an overnight journey. Today it’s only a 4-hour
down anytime soon. In journey. Earlier, if someone had a business idea, funding wasn’t
1990, the economy was available. Today, if you have an idea, you get funding from PE/
only worth 200 billion VC-funded entrepreneurs.
dollars. Fast forward to In the last three decades, we have built a strong foundation for
2021, and it is now worth India’s economy. We were once a small player in the global
3 trillion dollars. If this economy, but now we are a driving force. In 2021, we were the
trend continues, by 2030 fastest-growing major economy in the world and we are projected
the economy is expected to maintain this growth in the next two years. Markets should
to be worth 6 trillion reflect this long-term growth of the economy. Earnings would
dollars. This presents improve as the economy grows, and this could cause markets to
a huge opportunity rise in the long run. There will be ups and downs along the way,
for businesses and but if we look at where the market will be 25 years from now, it is
entrepreneurs alike. We clear that it will be much higher than it is today.
must take advantage of We always wanted to see a day when FIIs are selling while we
this growth and do in are buying and markets don’t fall. Thanks to retail investors, that
the next 8 years what day has come. In March 2020, FII sold around 48,000 crs, and
has taken us 75 years to Nifty fell from 12,500 to 7,500. From October 21 to June 22, FIIs
accomplish. sold Rs 250,00 crs and markets barely fell 10-12%. This was the

M
any believe that Rahu
Kaal is a time when
everything goes
wrong, but this isn’t the case
for India. India’s Rahu is oil
price and Ketu is Covid. From
2014 to 2021, we have seen oil
prices cross 100 dollars twice
and COVID. In Rahu Kaal,
India was the tenth largest
economy in 2014 and was the
sixth largest in 2021. Today it
is the fifth largest, ahead of the
United Kingdom. Our market
share in terms of GDP has

50 THE CHARTERED ACCOUNTANT JANUARY 2023 www.icai.org

 763

SPECIAL WRITE-UP

in the banking sector, which

means that your deposits or
loans are likely to come from
In the last three Capital goods could
only five or six different banks.
decades, we have Non-performing assets are lead the next leg of
built a strong fully provided for and our growth as we begin
foundation for banking and financial system to see an increase
India's economy. We is overall fairly solid. Plus, in demand from
were once a small margins have increased due both the public and
player in the global to a rise in interest rates lately, private sector.
economy, but now and valuations have become
we are a driving reasonable due to a lack of
force. performance in the recent past. Capital goods could lead the
Therefore, this sector could next leg of growth as we begin
drive a lot of growth in the to see an increase in demand
coming years. from both the public and
power of DIIs who invested
in a falling market to help us private sector. Companies in
The next sector that looks this sector have started to see
face FII selling. We are seeing promising for investment is
FIIs coming back to India now. a surge in orders and capacity
manufacturing. With China utilization has now crossed the
People are now not afraid of FII +1 policy, many companies
selling. We have a monthly SIP pre-COVID level. Additionally,
around the world are on the export market, some
book of 13,000 crs and Rs 45,000 considering investing in India
cash ready to be deployed in multinational companies are
and trying to source products looking to shift their sourcing
Equities by Balanced advantage from here. Additionally, the
funds. from China to India. So, overall
energy crisis in Europe is industrial and capital goods
India’s growth story is one giving Indian companies more is one sector where there is a
that is far more promising and opportunities to shine. We can great opportunity for growth
optimistic than many other expect to see similar success in the years to come. We are
countries in the world right stories in other sectors like at an advantage as all three
now. This is because we have technical fibres, electronics customers; the government, the
relatively low inflation rates, and auto components, just private sector and exports are
strong growth potential, and like we have in IT services, firing. The government was
better corporate governance generic pharmaceuticals and earlier giving orders and the
standards than many of our two-wheeler automobiles. tax revenues are fairly solid,
peers. Additionally, returns Manufacturing could see the they are sitting on three to four
are “green,” meaning that we kind of renaissance that we saw lakh crore of cash to spend,
are more environmentally and in the IT sector, generic pharma the private sector capex has
socially conscious than other sector, or chemical sector. Good been revived in renewable
countries. This combination companies which can meet energy in commodities, and the
of 3G, growth, governance, global supply and cover local exports market has opened up.
and green makes India a markets can be beneficial over Therefore, Capital goods are
very appealing investment the long term. likely to be firing on all three
destination for both local and fronts i.e. government, private
global investors. sector and exports.
The banking and financial This combination To sum it up, stay invested
services sector is one that of 3G, growth, in India’s future. Be a
could see a lot of growth in governance, and green regular investor - even small
the next 20 to 25 years. This makes India a very contributions can add up over
is because banks usually time. Be a long-term investor
appealing investment
grow 1.5 to 2 times the rate of - good things take time. Be a
the economy - since credit is destination for both
disciplined investor. Follow
necessary for economic growth. local and global
your asset allocation and don’t
Additionally, there is currently a investors. put all your eggs in one basket.
consolidation trend happening  nnn

www.icai.org THE CHARTERED ACCOUNTANT JANUARY 2023 51