Agneepath

Can the Indian economy grow at 10 per cent? This is the question that has been bothering me in the last few weeks. I was moderating a panel discussion for Bloomberg UTV (along with Pranjal Sharma) with some of the bigwigs of Public Sector Units in New Delhi a couple of years back and one of the theme of the discussion was India achieving a GDP growth rate of 10 per cent. That was a time India was cruising along well with its GDP growing at more than Nine per cent over the preceding three years in a row and hence achieving 10+ per cent growth looked much feasible and achievable. But the latest Economic Survey suggests that India would grow at 6.9 per cent in the current year and over the next two years we would be growing at 7.6 per cent and 8.6 per cent respectively. Today, no one talks about a 10+ per cent GDP growth and achieving that number looks quite distant. We take pride in achieving a 6.9 per cent GDP growth citing a disturbed global economic and socio-political scenario.

I am not sure what numbers India can achieve in the next 12 or 24 months as the economic and political equations are quite a hazy picture. In the last 12 months we have not seen any meaningful reforms that can push the country’s GDP to a higher growth trajectory. Our Infrastructure that needs a big push has been neglected big time and due to this, the sector that was dubbed to be a “Sunrise” sector does not find investors fancy. On the political front, there are serious question marks on whether the UPA-II government can complete its full term or not. And even if they are to complete their full term in office, one does not know of the steps they can take to push reforms. Any plan to push reforms is hitting a road block not from the main opposition party but from within the coalition parties itself and this puts the government in a clueless situation on how to handle a slowing economy. The latest budget from Finance Minister Pranab Mukherjee does not instill enough confidence that we are serious about curtailing the fiscal deficit which is time and again going beyond budgeted numbers. Dinesh Trivedi who took some verybold steps by hiking passenger fares after eight years in the Railway budget that he recently presented had to face stiff opposition not from anybody else, but from his own party chief costing him his ministerial berth.

So I am not bullish on Indian economy in the short term as we need to make some hard decisions to come out from this “Agneepath” and emerge as winners. But at the same time I have great respect and faith on Indian entrepreneurs who would successfully navigate the present scenario as they did in the past. For Indian entrepreneurs a scenario like this is not new and they would sooner or later find the right strategy to bring India’s growth back on track. So despite the short term picture not being as rosy, I continue to believe that the long term scenario would continue to be exciting for the country. India’s demographic dividend would come to play a major role in the progress of the country going forward. Infrastructure that has been neglected for the time being would get its due attention. If the long term scenario is good for the country then how can the stock market lag behind? India’s market cap in 1986, when your favourite magazine started, was mere Rs 28000 crore and today the same stands at a healthy Rs 63.51 lac crore. In other words, India’s Market cap grew at a CAGR of 23.20 per cent since 1986. I am of the opinion that India’s market cap would continue to grow at 15 per cent, if not more by 2025. By that calculation, India’s market cap by 2025 should be in the region of Rs 450 lac crore.

There would be new leaders on the stock market with new groups emerging as strong as some of the old business groups. In 1986, Infosys wasn’t there, but today it enjoys the highest weightage in the Sensex. In 1986, the Bharti group was not prominent, but today, Bharti Airtel has a market cap of Rs 1.23 lac crore as against some of the old business groups like the Rahul Bajaj Group where combined market cap of all group companies stands at mere Rs 70000 crore. Off late, Reliance Industries is also finding it hard to improve its market cap and one is not sure whether it can keep adding the same wealth for its investors in coming years as it did in the past. One should expect drastic changes in the order of Top 10 business groups in the country by 2025. Some Indian business groups would take over companies listed either on NASDAQ/NYSE by 2025. The same way we could also see Indian companies featuring in the list of the world’s top 25 companies based on market cap as today we have none while China has four. Similarly, today none of the Indian brands feature among the world’s 50 most valuable brands but by 2025 we would definitely see at least four Indian brands in that list. Today we have only one company available to Indian investors to invest in foreign companies through IDR but by 2025 there could be 50 global companies where Indian investors could invest trough IDRs. Also, a lot of Indians by 2025 would have started investing in the global equity market and that too through the direct route.

So, I am bullish on the Indian economy and the stock market with a long term horizon. I would continue to believe that the Indian equity market would remain an asset class that attracts Indian as well as foreign investors helping the indices to surge further. Your favourite magazine, Dalal Street Investment Journal, would continue to create wealth for investors as we have been doing over the last 26 years. You could see your favourite magazine in a different avatar with more digital platforms in the years to come and also covering international markets with insightful analysis.

Before I sign off my edit for this Anniversary issue, I must thank our readers who kept faith in us over the last 26 years. They helped us to continually innovate and make the magazine a really world class product through their continuous constructive suggestions and honest feedback. I am happy to share that many readers of the magazine who are outside the country are also enjoying the insightful analysis of DSIJ’s Core research Unit through our website www.dsij.in. The number of people subscribing to our products online from outside the country is increasing at a faster clip as this shows India’s importance in the International market.

I must also thank the complete editorial team headed by Shailendra Lotlikar, our Deputy Editor, who planned and executed this anniversary issue painstakingly to ensure that our anniversary issue is world class. I would also like to thank the complete space selling team headed by Surbhinder Singh Dhillon who ensured that advertisers pay a premium to reach elite customers like you. I would also like to thank DSIJ’s Core research Unit who have been day in and day out keeping themselves busy to find some of the hidden gems at the right valuations so that readers can keep increasing their wealth. Not to forget, this Anniversary issue too has some of the gems identified by our CRU team and comes in the package of Rs 26 lacs portfolio. But my special thanks goes to Deloitte who spelt out the vision for the country for 2025 through their insightful take on the economy and other vital components of the economic system and CRISIL who have contributed Industry research for this special edition.

I am sure you would enjoy this power packed issue and yes you can always send me your constructive suggestion and honest opinion on managingeditor@dsij.in.

The kind of love and respect that gave it to the product in last 26 years I am sure you would continue to give your love and support for many decades to follow.