India’s Growth Story Resilient .. Here’s Why

We at Finizon recommend that investors stay aligned with their  long term investment objectives with respect to  investments in equity mutual funds . Incidentally the long term India growth story also looks resilient and robust and here's why we say so ...  

Why  India's Growth May Be Resilient

India's long term growth story intact. Following are the key indicators

• India's Focus on Long Term Growth
• India's consumption Engine
• Health of Economy
• Digitization  Formalization to  boost growth
• Tail wind from global environment
• India getting its act together

Let's discuss the above factors  with data points

India's Focus on Long Term Growth

1. Revenue to Capital Expenditure

*PA : Provisional Actual

*BE : Budgeted Estimate

2. Capital expenditure focused more towards building long-term infrastructure

• Railway
• Roads
• Ports
• Constructions
• Highways and Bridges

India's Consumption Engine

1. Rising Working Age Population ( is higher than the World since 2016 , and as on 2020 it crossed 50% )  coupled with wider scope for penetration may Accelerate India's Consumption Engine

2. India has larger scope to penetrate in white goods consumption with Rising income levels

Health of Economy

Unlike other crisis, India is in much better shape with Corporate and Banks balance sheet continuing to remain strong

1. Corporate Debt % to GDP : This was at 62% in 2015 , it has been receding since then , its at 49% in FY 24 Estimates

2. Banks have repaired their Balance Sheets in last few years : The GNPLs ( Gross Non Performing Loans ) and Restructured loans have receded from 12.4% in Fy 15 to 7.50% in FY 22

India is getting its act together

Government Reforms are on the fast track creating a smooth runway to participate in the Global supply chain

1. Production linked Incentives  : To boost domestic manufacturing
2. Insolvency and Bankruptcy Code : Provides for insolvency resolution in time bound manner
3. National Asset Reconstruction : A 'bad bank' to aggregate & acquire stressed loans
4. Land Reforms : Creation of Land banks to make land easily identifiable for industrial projects
5. PM Gati Shakti : Allocation of Rs. 100 Tn. to expedite the projects of National Infrastructure Pipeline
6. Taxation Reforms : Cut in Corporate Tax rates to 22%*, introduction of GST & faceless tax assessment

Tail Wind From Global Environment

Global environment has become more challenging with companies focusing on diversifying their supply-chain. This has provided a huge fillip to India's manufacturing dream

1. Manufacturing Wage : Since 2019, 2020, 2021 , while Singapore , South Korea , Taiwan , China , Thailand , Vietnam , Indonesia manufacturing wage $ per hour has increased , India has remained fairly constant . Lowest Labour Costs makes 'Manufacturing in India' favourable

2. Key Announcements by Global Companies to invest in India

Digitilization /  Formalization to Boost Growth

1. Rise in Digital Payments

UPI Transactions have increased  significantly since 2017

2. Rise in Payroll Addition

EPFO Net avg. monthly subscribers have increased in April to Nov 2021 ( 8.8 lakhs ) to April to Nov 2022  ( 13.20 lakhs )