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India
India: Observations from the Ground
03/25/2019
Gaurav Sinha, Associate Director, Asset Allocation and Modern Alpha


There are a lot of macro indicators we can use to track a country, but nothing compares to on-the-ground observations.

 

Recently, I completed a weeklong trip to India. Here are a few of my observations from the trip.

 

Welcome, Travelers!

 

Delhi’s International Arrival Terminal T3 looks like any modern airport. Walking to the baggage claim area, travelers navigate through moving sidewalks, fancy lounges, and plenty of battery-operated vehicles. For a moment, it appeared I arrived somewhere in the West, only to be reassured that I was in India by the giant, gracious silver statues of mudras1 posing at the immigration counter.

 

Baggage Claim and Ground Transportation

Delhi has a state-of-the-art subway system that ensured a smooth ride to my hotel, helping me also save few bucks by avoiding an expensive cab ride.

Trains are electronically tracked at every station. They have superb connectivity to Delhi and its neighboring cities/suburbs. As in New York (or in any big city in the U.S.), the subway system connects the airport to the railway station smoothly. You can even check luggage right at the railway station for a flight from the airport.

Gurgaon—a satellite town of Delhi with a big presence by more than 250 Fortune 500 companies—even has an interoffice subway that connects to the Delhi subway. It runs from building to building. Shorter commute times may enhance productivity.

Domestic Connections and Tier 2 Cities

Even the airports at smaller cities (Prayagraj, Varanasi, etc.) are now much better run than before. Just a few years ago, these airports were tiny, and what used to be a two-room building is now a major complex. As you move into these cities, you may find multilane roads with stretches of up to six lanes occasionally cutting right through the city. Serpentine overpasses are everywhere, with subway lines running in the background. A few years back, I didn’t see even half of these overpasses. The speed at which the country built them is amazing.

Everywhere you go in the Delhi region, you’ll not just find small bazaars but also enormous shopping malls filled with showrooms of luxurious Italian and French brands. Gurugram alone has 26 large malls, one of which houses a full kilometer of shopping length on each floor. While global brands have always been in India’s bigger cities, now the smaller towns are having their turn, whether the brands are fashion names like Prada and Gucci or food chains like Subway and Pizza Hut and their online food delivery apps. I was never away from the brand names I see in New York City.

Economy

Beyond these on-the-ground observations, let’s also highlight changes that have taken place in India’s economy over the last few years.

When Prime Minister Narendra Modi got a clean and decisive mandate in 2014, there was a structural shift in the way India voted. Unlike as in previous governments, this was the first time in three decades that a single political party got a clean mandate in India’s typically fractured, fragmented and coalition-based political system. So, expectations were sky high, and the Modi government did not disappoint. What India has achieved in last few years is truly staggering.

Though there were thousands of reforms implemented in last five years, I will highlight the most fundamental changes.

Financial Changes:

 

  • Simplifying and unifying India’s complicated taxes under the Goods & Services Tax (GST). This subsumed over 17 tax line items on every purchase to just one national tax. It made the country a true unified economic zone.
  • Implementing the bankruptcy code to expedite liquidation and recovery of nonperforming loans.
  • Stimulating microlending, as employment in the unorganized sector accounts for nearly 86% of total employment, through a government backed microlending agency.
  • Giving incentives to savers to deposit money in banks by providing free life insurance, bringing financial inclusivity to every individual in the country.

Socioeconomic Changes:

 

  • Implementing biometric-based unique identification (including retina scans and fingerprints), called Adhaar, for the country’s 1.3 billion people.
  • Connecting biometric identification to bank accounts and mobile phones, creating a trinity of banking, identification and connectivity. This makes India a data gold mine  in incubation, and also cuts middlemen thereby stopping leakages in government welfare schemes.

Employment Generation:

 

  • Setting up various economic zones and government-backed semiprivate setups to encourage manufacturing education.
  • Giving large tax benefits to start-ups and smaller shops that employ fewer than 100 people.

Infrastructural Focus:

 

  • Building an average 17 miles of roads every day in India over the last five years.
  • Achieving 100% electrification to its last villages/hamlets over the last five years.    

 

I can go on and on about reforms/structural changes, but that would require a book! I hope this has given you some idea of the scale at which growth is happening in that part of the world.

 

From its #142 rank on the World Bank’s ease-of-doing-business list in 2013, India is now #77 out of the 190 countries tracked by the bank.

 

No country had ever jumped 30 spots, but when India did that in 2017 alone (from 130 in 2016 to 100 in 2017), many investors started taking this country more seriously.

 

 

 

1Mudras poses are a symbolic hand gesture used in Hindu and Buddhist ceremonies and statuary, and in Indian dance.


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