India Entering The Investment Bull Cycle, Says Natixis' Trinh Nguyen
Nguyen listed increased participation of domestic capital in equities, infrastructure spending and low corporate leverage ratio as reasons.
Policy initiatives to encourage investments in infrastructure, growing pool of labour and better management of capital financing and debt levels is contributing to India's attractiveness and leading it to an investment bull cycle, according to an emerging market observer.
"India is investing in the right place in infrastructure and empowering people," Trinh Nguyen, senior economist covering emerging Asia at Hong Kong-based investment bank Natixis, told NDTV Profit.
"The capital market is also improving. Labour market flexibility is changing in the right direction. Energy consumption growth per capita is also growing," she said.
Investment Bull Cycle
India is entering the investment bull cycle, Nguyen said, noting increased participation of domestic capital in equities and infrastructure spending. "In the past, infra financing was via banks, now it's broadening so that risk is not concentrated. Urbanisation, population growth, industrialisation puts a lot of pressure."
Corporate leverage ratio in India has declined and balance sheets have improved, she said. "The corporate debt-to-GDP ratio is very low, only about 55%, compared to China's 165%. Other countries in East Asia also have high debt."
The government has managed to streamline revenue collection, according to her. "We still want tax revenue to increase, but streamlining is important to tap more fiscal space."
Though India's demand for energy and commodities will rise, it will be able to source them cheaply as competitor China's growth slows on a structural level, Nguyen said. She expects oil prices to stay below the $100 per barrel mark.
She also said that government incentives to promote manufacturing will help in exports and a low base level would add a fillip to the jump.
"India needs to grow its manufacturing share (in GDP). It is easier for foreign portfolio investments than going and building a factory. The growth will be gradual and can be accelerated," she said.
Watch the full conversation here:
