Aditya Birla Sun Life Mutual Fund

India Scorecard: Positives & Challenges for India today

Aug 05, 2019
6 mins | Views 7961

Positives:

  • India’s GDP growth at 6.8% April 2019 [1] is one of the world’s fastest growing economies. Making India a $5 trillion [2] economy may seem possible through sustainable development & reforms.

  • 65% of the Indian population is below 35 Census 2011 [3]. India Demographics are an impetus to Domestic and Foreign Direct Investors.

  • With growing awareness of the Indian middle-class, the inflow via SIPs in the four years to FY18 were 4X higher than that in the 10 years prior Jan 2019 [4], building a domestic investment scenario.

  • Initiatives like tax reforms, procurement reforms and improved bankruptcy & solvency issues have boosted Entrepreneurial morale. India improved its place to 77 on World Bank’s “ease of doing business” list Oct 2018 [5].

  • Central and State Govts focusing on autonomous investments, Road Constructions, Irrigation Improvements and Make in India initiatives, the income multiplier effect may come into effect, suggesting increased consumption and investments.

Challenges

  • Though India’s youth may be a huge asset, unemployment rate stood at 6.1% in FY2018, a four-decade high June 2019 [6]. Also, only 47% of Indian graduates are employable [7].

  • The recent NBFC crisis may suggest a critical need for restructuring economic reforms [8].

  • Rising trade wars may paint a gloomy picture for Indian Exporters and Importers. US has done away with the preferential trade treatment for India and India too has imposed tariff on 28 imported goods May 2019 [9].

  • NPA’s have the banks and investors troubled. Gross NPA stands at 9.3% as on March’19 [10] and public-sector banks are most affected.

  • The expectations from the new Finance Minister have increased, with the current fiscal deficit at 4.52% in February 2019 end, crossing the govt. expectation by a 134% April 2019 [11].

Source:

[1] https://en.wikipedia.org/wiki/Economy_of_India, April 2019

[2] https://www.businesstoday.in/current/economy-politics/goal-to-make-india-5-trillion-economy-by-2024-challenging-but-possible-says-pm-modi/story/356407.html

[3] https://www.scoopwhoop.com/facts-about-indian-youth/, Census 2011

[4] https://economictimes.indiatimes.com/markets/stocks/news/indian-households-increase-equity-play-via-the-sip-route/articleshow/67465398.cms?from=mdr, January 2019

[5] https://www.cnbc.com/2018/11/01/world-bank-india-improves-ease-of-doing-business.html, October 2018

[6] https://economictimes.indiatimes.com/jobs/indias-unemployment-rate-hit-6-1-in-2017-18/articleshow/69598640.cms, June 2019

[7] https://indianexpress.com/article/education/only-47-38-indian-graduates-employable-engineering-tops-the-list-5459556/, India Skills report 2019

[8] https://www.moneycontrol.com/news/business/all-you-want-to-know-about-the-nbfc-crisis-3966551.html

[9] https://www.news18.com/news/world/apples-almonds-to-get-costlier-as-india-hikes-customs-duties-on-28-us-goods-with-effect-from-sunday-2188627.html, May 2019

[10] https://www.thehindubusinessline.com/money-and-banking/scheduled-banks-healthier-now-as-gross-npa-ratio-dips-in-fy19/article27704992.ece

[11] https://www.businesstoday.in/current/economy-politics/india-fiscal-deficit-touches-452-of-gdp-in-february-end-report/story/345130.html

Latest available data is provided.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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