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  • Writer's pictureDon Valdez

Is India the new jewel for those looking for the best returns in Emerging Markets?



Indian stocks started 2023 on an upswing. India’s BSE Sensex has gained a strong 12.14% this year, showing its increasing significance in the investment world. Even though it's not always in the spotlight like stock markets in other developed countries, more foreign investors are getting interested in India's potential. Astra is here to explain the growth and challenges India is facing, helping you to see if this investment opportunity is right for you.



India's Emergence as a Manufacturing Hub

Much like China's growth trajectory in past decades, India is now attracting a lot of global manufacturing companies. Known companies like Apple, Cisco, Micron, and Google are moving their operations to India, mirroring the successful strategy witnessed in China. This isn't just about moving factories; it's about reaching a growing local customer base, boosting the economy, and creating more jobs locally.


Demographics: India's Youthful Advantage

India has surpassed China in population, boasting a predominantly young demographic. With an average age of 28.4 years (much younger than the global average of 31 years old), India's young population is an opportunity for businesses. The government's 'Startup India' plan led to over 72,000 startups in 2022, mostly driven by millennials, a clear indication that the government is strategically leveraging these advantages for long-term benefits. But to make the most of this, India must also address challenges in education, poverty, healthcare, and unemployment.


Improving Education and Creating Jobs

Enhancing India's literacy rate of 74.37% is crucial, and addressing the unemployment rate requires substantial effort to create hundreds of thousands of jobs monthly. Encouragingly, there has been steady improvement over the past decade as the government and private sector have taken measures to improve education and generate jobs consistently.


Lifting the Poor and Accessible Healthcare

Positive trends are emerging in the household and healthcare of people in India, as highlighted in a report by the United Nations Development Program (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI). Indians who are multidimensionally poor and deprived under the nutrition indicator decreased from 44.3% in 2005/2006 to 11.8% in 2019/2021. Furthermore, India’s child mortality rate declined from 4.5% to 1.5%.


India's Economic Trajectory

India's economy is evolving as urbanization, formalization of the economy, and increased access to financial services become prevalent. The GDP is expected to grow by a strong 6.30% in 2023 and will be 6.70% in 2024, according to the Asian Development Bank. This is attributed to the robust performance of India's service sector, which is anticipated to continue expanding in 2024, supported by the high-performing banking sector.


India's banking sector remains robust, and the ongoing formalization of the economy is expected to prompt more people to engage in formal banking. This benefits the long-term health of India's banking sector. Notably, banks like HDFC Bank have more room for growth potential, currently serving only 5.0% of India's population despite being one of the largest banks in the country.


India's Path Forward

As the economy advances and the government allocates more resources to sectors like health, education, and infrastructure, India is heading for long-term growth. But for this growth to keep going, the government should continue to address the challenges and opportunities associated with the demographic surge.


With continued support for vulnerable sectors and strategic utilization of its young population, India can anticipate prolonged economic growth and social development.


Drop us a message

India might not be for everyone so chat with your Astra Advisor to see if an investment in India fits in with your risk profile and financial goals. Astra facilitates investments in some Indian stocks and mutual funds with exposure to India and various sectors, supporting your financial goals.


Embrace the potential for growth; kickstart your journey to a prosperous financial future by reaching out to Astra today!

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