It is obvious that economic play (growth or depression) revolve around demand-supply dynamics; business opportunities emerge when excess demand lead to supply capacity expansion where cash (equity and debt) is put to work to create jobs & wealth which creates additional demand for goods and services. This combination sets up consistent growth momentum, leading to sustainable bullish undertone of financial assets. This cycle should not be allowed to be broken to retain global economic prosperity!
The issue now is from combination of sharp drop in demand, sub-optimal use of existing capacity and money kept idle in low risk-safe haven assets. Central Banks world over are in rescue act to create demand through ultra-dovish monetary policy (through ZIRP and QE) but opportunities for deployment of liquidity are few! The demand pick-up has to be from Public, Private and combination of both (PPP model to build social infrastructure and support to economic expansion in manufacturing and agriculture sectors).
India had a late-start behind China (and most other EMs), which has now put India in advantage position. There is huge upside for creation of demand beyond the established supremacy in IT, ITES, Pharma and Consumer sectors. The next decade is for India to establish its supremacy over the peers and squeeze the gap with the leaders. At mid-point of the race, India has moved up from the laggards to the crowd in the middle; platform is now perfect to gain speed for move away from the mid-crowd into the leaders league.
Demand creation will emerge from build-up of economic & social infrastructure, "make-in-India" manufacturing story, unearthing natural resources family wealth and the huge upside in agriculture production. The Modi Vision (and Mission) for 2019-2024 is clear, which remains as "wish" at this stage; efforts are visible to turn this wish into strategies and tactics for efficient execution. Modi cannot do it alone; he needs support from administration, investors and the entire manpower of India. Modi's mantra to combine human skills and technology to build speed and scale is a great step in the desired direction. The target is set and visible; but it is distant away at this stage and we need to see milestones at short distance to reach there through shortest possible route. If this process is set in motion quickly, there is huge upside for India financial assets and great monies to be made from equity, debt and currency. India is prepared for significant re-rating from 2014 to 2019/2024. There is no reason to dilute the optimism and positive investor sentiment.
Let us join hands in support to Narendra Modi and his team!
Moses Harding
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