Indian Economy

[nwoodman]

Haven’t fully crunched the numbers but this growth in lending seems somewhat higher  than  GDP growth.  Eyeballing it seems around 12-13% CAGR over the 9 years from the graph.  Something to keep an eye on and a good test for the RBI. 

 

 

 

https://asia.nikkei.com/Business/Business-Spotlight/Indian-consumer-borrowing-surges-raising-fears-of-defaults

 

“The central bank's change of risk weightings could prod lenders to increase rates, thereby discouraging consumers from reckless borrowing, analysts say. If banks choose to absorb the cost, their margins will shrink, making unsecured loans a less attractive segment.

 

Financial services company Paytm said in a statement that it would reduce the disbursal of small loans "on the back of recent macro development and regulatory guidance."

 

"That nudge from RBI to be cautious on unsecured retail lending can push lenders to slow growth in this segment, which can also impact overall bank credit growth by up to 100 basis points," research company Jefferies wrote in a note.”

[nwoodman]

Zeihan on India - demographic tailwinds good for at least 40 years

 

 

Edited January 2, 2024 by nwoodman

[nwoodman]

 

If there was a single narrative that could get Fairfax trading at 1.5x’s book it would have to be India

 

 

 

 

 

[Viking]

53 minutes ago, nwoodman said:

 

If there was a single narrative that could get Fairfax trading at 1.5x’s book it would have to be India

 
@nwoodman i agree. There are a number of catalysts that might come to fruition in 2024 for Fairfax in India:

1.) Digit IPO - surface value in Digit

2.) Anchorage IPO - surface value in BIAL

3.) NSE and Seven Island Shipping IPO’s - surface value in Fairfax India

 

There were also the rumours of Fairfax making a bid for IDBI Bank. 

[nwoodman]

20 minutes ago, Viking said:

There were also the rumours of Fairfax making a bid for IDBI Bank. 

It sounds like the sale will be delayed until after the election (April/May).  As far as I can tell it is still a two horse race:

 

https://www.financialexpress.com/business/banking-finance-no-hurried-merger-if-another-bank-acquires-idbi-bank-3283816/

[SafetyinNumbers]

23 minutes ago, Viking said:

 
@nwoodman i agree. There are a number of catalysts that might come to fruition in 2024 for Fairfax in India:

1.) Digit IPO - surface value in Digit

2.) Anchorage IPO - surface value in BIAL

3.) NSE and Seven Island Shipping IPO’s - surface value in Fairfax India

 

There were also the rumours of Fairfax making a bid for IDBI Bank. 

There sure are a lot of catalysts. Also, it seems like a bid for IDBI Bank would be a merger or takeover by CSB Bank which is already a big position. I’m really curious what that would look like given the size differential. I’m hopeful, FFH also finds away to use its performance fee to buy shares in FIH. That would help the narrative too!

[nwoodman]

India Overtakes Hong Kong as World’s Fourth-Largest Stock Market

 

 

“India’s stock market has overtaken Hong Kong’s for the first time in another feat for the South Asian nation whose growth prospects and policy reforms have made it an investor darling.

The combined value of shares listed on Indian exchanges reached $4.33 trillion as of Monday’s close, versus $4.29 trillion for Hong Kong, according to data compiled by Bloomberg. That makes India the fourth-biggest equity market globally. Its stock market capitalization crossed $4 trillion for the first time on Dec. 5, with about half of that coming in the past four years.”

 

https://www.bloomberg.com/news/articles/2024-01-23/india-overtakes-hong-kong-as-world-s-fourth-largest-stock-market?cmpid=socialflow-twitter-business&utm_content=business&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social&embedded-checkout=true

[Haryana]

..Budget 2024 Charts a Course for Global Tourism Hub..

https://voyagersworld.in/indias-grand-odyssey-nirmala-sitharamans-budget-2024-charts-a-course-for-global-tourism-hub-with-a-spotlight-on-lashadweep-2/

 

Madhavan Menon, Executive Chairman, Thomas Cook India Ltd.

The interim Budget presented by the Finance Minister has focussed on Tourism with a multipronged approach that we believe will create a multiplier effect across aviation, tourism and allied sectors, boosting growth and employment generation.

We welcome the announcements on airport development and expansion: having already doubled to 149 airports in the last decade, the government’s plans to boost air connectivity by the addition of 517 new routes across Tier 2-3 cities, carrying 1.3 crore passengers via the UDAN scheme, will play a critical role with vibrant hub and spoke air corridors to boost accessibility-affordability for Regional India.

Implementation of major rail connectivity corridors via the PM Gati Shakti program together with port and metro/rapid transport expansion will serve to create valuable multi modal connectivity for Tourism.

We welcome the special focus on Domestic Tourism which represents a vibrant growth driver via the government’s plan of long-term interest free loans to States; development of iconic tourism centres by States along with marketing on global standards. What was noteworthy is the reference to Spiritual Tourism and projects for port connectivity, tourism infrastructure and amenities on islands including Lakshdweep – aimed at development of India’s hidden gems and employment opportunities.

Further, the strong capex outlay of Rs 11.11 lakh cr, a significant 4% of our GDP, will serve as a catalyst to the Country’s growth potential and job creation.

 

[Saluki]

Protesting Indian farmers clash with police for a second day as they march toward the capital (msn.com)

 

If I recall, FFH had an investment in Indian Ag (pulse crops?). I wonder if this will have an effect on that business?  I did notice that FF India was down yesterday (so was everything), and I still like both companies, but would add to FF India before FFH.  

 

Although protests are obviously bad if you own an airport and make money from tourism. 

[Haryana]

23 hours ago, Saluki said:

Protesting Indian farmers clash with police for a second day as they march toward the capital (msn.com)

 

If I recall, FFH had an investment in Indian Ag (pulse crops?). I wonder if this will have an effect on that business?  I did notice that FF India was down yesterday (so was everything), and I still like both companies, but would add to FF India before FFH.  

 

Although protests are obviously bad if you own an airport and make money from tourism. 

 

What is the impact of US mass shootings on trade and tourism

 

[Haryana]

https://www.gemconsortium.org/file/open?fileId=51377

 

[maplevalue]

India’s Feet of Clay: How Modi’s Supremacy Will Hinder His Country’s Rise

https://www.foreignaffairs.com/india/indias-feet-clay-modi

 

A balanced article; thought there were quite a few similarities to Xi

Edited March 6, 2024 by maplevalue
spelling

[ICUMD]

On 3/6/2024 at 5:17 PM, maplevalue said:

India’s Feet of Clay: How Modi’s Supremacy Will Hinder His Country’s Rise

https://www.foreignaffairs.com/india/indias-feet-clay-modi

 

A balanced article; thought there were quite a few similarities to Xi

Amongst his peer group, seems like a pretty good leader doing a great job.  Not an easy task to lift a few hundred million out of poverty. Curious to read the critiques on Netanyahu, Putin, and Biden/Trump.

[nwoodman]

MS just released their India Macro chart pack.  Always interesting, but one chart in particular caught my eye.  I wonder if this is a partial "Apple/Foxcon Effect" 

 

Apple Reportedly Doubles iPhone Production in India, while Foxconn Holds 67% Share

 

 

 

 

MS  remain optimistic about future growth prospects as follows:

 

 

Outlook: On growth, we remain constructive on the growth outlook, given support from domestic demand, as reflected in the robust trend in high-frequency growth data. As such, we expect GDP growth at 6.8% in F2025 and 6.5% in F2026. With regard to macro-stability, we anticipate headline inflation to remain supported by favourable base effects and thus remain in a range around 5% YoY in 2Q24, while it softens to 4.1% YoY in 2H24. We expect CPI to average at 4.5% YoY in F2025-26. Similarly, current account deficit is likely to remain benign, supported by strength in services exports, and remain within the policymakers comfort zone at ~1-1.5% of GDP in F2025-26. On monetary policy, we expect policy rates to remain steady at 6.5% in our forecast horizon. This is on the back of a shallower and deferred rate cut cycle for Fed on the global front and improving productivity growth, rising investment rate and inflation tracking above the target of 4% on the domestic front.

 

Chart pack attached

 

INDIA_20240422_2300.PDF

[dartmonkey]

On 4/22/2024 at 10:25 PM, nwoodman said:

MS just released their India Macro chart pack.  Always interesting, but one chart in particular caught my eye.  I wonder if this is a partial "Apple/Foxcon Effect" 

 

Apple Reportedly Doubles iPhone Production in India, while Foxconn Holds 67% Share

 

 

MS  remain optimistic about future growth prospects as follows:

 

 

Outlook: On growth, we remain constructive on the growth outlook, given support from domestic demand, as reflected in the robust trend in high-frequency growth data. As such, we expect GDP growth at 6.8% in F2025 and 6.5% in F2026. With regard to macro-stability, we anticipate headline inflation to remain supported by favourable base effects and thus remain in a range around 5% YoY in 2Q24, while it softens to 4.1% YoY in 2H24. We expect CPI to average at 4.5% YoY in F2025-26. Similarly, current account deficit is likely to remain benign, supported by strength in services exports, and remain within the policymakers comfort zone at ~1-1.5% of GDP in F2025-26. On monetary policy, we expect policy rates to remain steady at 6.5% in our forecast horizon. This is on the back of a shallower and deferred rate cut cycle for Fed on the global front and improving productivity growth, rising investment rate and inflation tracking above the target of 4% on the domestic front.

 

 

It is amazing to me that they don't mention, in this outlook summary, what jumps out at me in their numbers, which is the fiscal deficit. Combining federal and state deficits, this was 9.2% of GDP in 2023 and is expected to come down slightly to 8.9% in 2024 and 7.9% this year. In the USA, federal deficit was 6.3% of GDP in 2023, or $1.7T, with another $1.2T from state and local governements,  so the number is comparable. Both are unsustainable, and it would seem worth mentioning that this stimulus can not go on forever.

 

In India's case, there is some consolation from the fact that accumulated debt is not as high as the levels typical in Europe and North America. For the USA, this is 121% at the federal, with another 14% from state and local governments, for a total of 135%. In India, fortunately, debt levels are lower, 61% at the federal level and 30% at the state level, for a total of 91%. In addition, the 9% or so combined deficit is not far from the real GDP growth rate of about 8%, compared to the USA's growth rate of less than 2%, so India's real indebtedness as a percentage of GDP may at least remain at about the same level as a proportion of GDP.

 

 

[treasurehunt]

6 hours ago, dartmonkey said:

It is amazing to me that they don't mention, in this outlook summary, what jumps out at me in their numbers, which is the fiscal deficit. Combining federal and state deficits, this was 9.2% of GDP in 2023 and is expected to come down slightly to 8.9% in 2024 and 7.9% this year. In the USA, federal deficit was 6.3% of GDP in 2023, or $1.7T, with another $1.2T from state and local governements,  so the number is comparable. Both are unsustainable, and it would seem worth mentioning that this stimulus can not go on forever.

 

If India's real GDP can grow at 6.5% and inflation is at 4.5%, the nominal GDP growth rate will be roughly 11%. This level of nominal GDP growth can sustain fairly high fiscal deficits without increasing the debt to GDP ratio, right?

[whatstheofficerproblem]

I would suggest everyone read the INC's 2024 Election Manifesto:

https://manifesto.inc.in/assets/Congress-Manifesto-English-2024-Dyoxp_4E.pdf

 

People vote for BJP not because the BJP is good (which it somewhat is), but because Congress is so utterly bad. That manifesto looks like it's been made by a 5 year old who has no understanding of any financial concepts let alone geopolitics.

 

Compare the above Manifesto to that of the BJPs and you will see why Indians seem to want this 'dictator'. On another note, Indian randomly vote for unsustainable subsidies, a population that has gotten used to freebies has no future.

 

On one hand you want development, on another you want subsidies, on a third hand Indian Businessmen are somehow crony capitalists but foreign ones are Christ's second coming, on a fourth hand you don't want to mine minerals because you care too much about the environment but also want a mineral economy. - 'you' referring to urban upper class elitist 15-25 y/o who cry dictatorship all day.

 

India seems to be the only 'dictatorship' where you can bad mouth the dictator every day and write a million articles on it all the while sipping wine in your apartment in South Delhi with no consequences at all. The only 'Hindu Nationalist' country where you can say please remove the police for 15 mins and see what we do to the majority & still roam free, and where the so called Hindu Nationalists fight for >100 years in court to get their own temple back.

 

From the inside looking out, it seems western media hates anyone who refuses to play long with the west's ideas, don't even get me started on academia.

Edited April 27, 2024 by whatstheofficerproblem

[nwoodman]

Looking good for Modi and the BJP

 

India Stocks, Bonds Set to Gain as Polls Show Landslide Modi Win

 

Indian stocks, bonds and the rupee are poised to climb on Monday after exit polls indicated a resounding victory for Prime Minister Narendra Modi’s party in general elections that concluded Saturday.
 

The polls suggest the Bharatiya Janata Party-led alliance will clinch substantially more seats than the 272 required for a majority in the 543-seat lower house of parliament, with most pollsters predicting the group will win between 350 and 400 seats in total. In 2019, the alliance won 352. The votes will be counted on Tuesday.

[Junior R]

India stock market hits new all time highs

[nwoodman]

Ouch, what a shitshow.

 

Railway stocks tank 20% as election trends diverge from exit polls

https://economictimes.indiatimes.com/markets/stocks/news/railway-stocks-tank-13-as-early-election-trends-diverge-from-exit-polls/articleshow/110693788.cms

Download Economic Times App to stay updated with Business News -
https://etapp.onelink.me/tOvY/135dde21

Edited June 4, 2024 by nwoodman

[gfp]

Look at that - you put Ben Watsa in charge for one day and the entire Modi mandate crumbles.  Bring back Prem before we lose decades of progress!

 

Seriously though, I think even the opposition would be in favor of privatization and airport IPOs and it sounds like Modi will get a coalition and alliances and all that.

[Gamma78]

There is a narrative that for privatization India needs Modi. While he has been a good accelerator to many development issues (and infrastructure in particular) make no mistake: India is a strongly growing country in of itself, no matter which party is in charge. And it has been a high growth country pretty much since 1990 with alternating governments of different types and stripes. That is the real testament to the strength of growth. Zoom out and you see that this result works just fine over time. 

[dartmonkey]

Ouch, what a shitshow.

 

Railway stocks tank 20% as election trends diverge from exit polls

 

Definitely a disappointment that the BJP looks like it will not get an outright majority.

 

True, with 272 seats necessary to pass laws, it looks like his NDA coalition is heading towards about 292 seats. This is substantially less than the NDA hoped for (355-370), and less than the outgoing parliament (353), but still 20 seats over a majority. But Modi's BJP party, while it is by far the biggest party in the NDA coalition, will only get about 240 seats, so they will need about 32 additional votes from one of the parties they campaigned with (there are about 30 of them). That will obviously mean compromises to Modi's political agenda. 

 

https://indianexpress.com/article/explained/explained-politics/lok-sabha-results-bjp-nda-partners-9372070/

[Munger_Disciple]

15 minutes ago, dartmonkey said:

Ouch, what a shitshow.

 

Railway stocks tank 20% as election trends diverge from exit polls

 

Definitely a disappointment that the BJP looks like it will not get an outright majority.

 

True, with 272 seats necessary to pass laws, it looks like his NDA coalition is heading towards about 292 seats. This is substantially less than the NDA hoped for (355-370), and less than the outgoing parliament (353), but still 20 seats over a majority. But Modi's BJP party, while it is by far the biggest party in the NDA coalition, will only get about 240 seats, so they will need about 32 additional votes from one of the parties they campaigned with (there are about 30 of them). That will obviously mean compromises to Modi's political agenda. 

 

https://indianexpress.com/article/explained/explained-politics/lok-sabha-results-bjp-nda-partners-9372070/

 

More importantly BJP won 303 seats in 2019, a majority by itself before counting on its partners in NDA. That has gone now, so Modi has to rely on his partners (who have varying ideas) to get anything done. Definitely a negative for reform plans of Modi. 

Edited June 4, 2024 by Munger_Disciple

[Junior R]

What are everyone's thoughts on outlook for India given BJP is no longer majority government? Would this be an issue for foreign investments ?