Perception About India Right Now Strongest In Last 20 Years, Says ANZ’s Richard Yetsenga

The external perception of India has not been as strong as it is at present in at least the last 20 years, according to Australia-based ANZ Group Holdings Ltd.'s Chief Economist Richard Yetsenga.

Commenting on the possible impact of the US Federal Reserve rate cut cycle on emerging markets like India, Yetsenga said that if there were any significant issues on the horizon, they would have surfaced by now. Earlier this month, the Fed had announced a 50 basis point rate cut.

“Emerging markets like India have been through the most difficult part of the cycle—aggressive Fed tightening, and structural China slowdown. If there was going to be an emerging market problem, the intersection of those two things should have given us one,” he said.

The economist noted that emerging markets have gone from strength to strength in recent times.

“I can’t recall a time in my 20 years of coming here that the external perception of India has been so strong,” he said.

When the Fed tightened its policy, it did not have any uncomfortable financial fragility flow-ons into the Indian economy, which has shown the country’s financial resilience, he added.

“Ten years ago, India was one of the ‘fragile five’, now it’s one of the ‘Fantastic Five’,” Yetsenga said.

He noted that while China’s structural slowdown was initially seen as a negative impact, it ended up helping the region. “What’s happened is, every dollar of global capital is no longer looking at China,” the economist added.

According to Yetsenga, there is no gravity that can pull India down at the moment.

“India in GDP per capita terms is a $2,500 economy. I don’t think there is any gravity yet. We are spacewalking here. There is plenty of runway to go,” he said.

Yetsenga claimed that the challenges that India could face involve the possibility of managing the excess rather than insufficiency.

“India’s challenges are questions about the excess—managing the amount of demand, making sure financial excess is not emerging, making sure that fiscal position is allocating capital in the right way. It’s not a problem of insufficiency,” he explained.

Yetsenga said that "economic magic" in India will continue to happen as long as there are ongoing, consistent reform programmes.