How india will shape up:-
Lets look at how india may shape up in the coming years:-Global paucity of real investment growth for geo-political reasons will continue to lead to liquidity reflating all asset classes. Thus, capital will continue to seek real growth and entrepreneurship in countries like India. The following secular undercurrents will help India override cyclical pressures.
Domestic natural gas: Gas supply could increase ~2.5x by '10 and shave off ~$5-10 billion from the import bill.Software exports could fetch ~$9 billion in '08, easing the pressure on current account deficit.The capital account may remain robust with strong FDI, ECBs, and NRI deposits.
Complete transformation of India-scape '09+: Initiatives for infrastructure creation are morphing the larger economic environment. There is a build-up in infrastructure with changes in installed capacity, which will not only boost industry's efficiency, but also provide a global scale of operations.
Consumption story: According to a McKinsey report, household disposable incomes will treble and aggregate consumption will quadruple over the next two decades, making India one of the largest consumer markets in the world. Income growth at 80% will be the biggest consumption driver for India. But companies will have to become more volume-driven to offset competition.
Marginal producers may under-perform in a challenging environment. So, increasing M&A opportunities are likely. The real challenge for India Inc lies in the fact that companies will have to shift from merely managing scalability to managing the global industry environment itself.
So,even while the environment remains challenging in the near term, growth necessitates end of domestic tightening cycle, and secular trends continue to override cyclical concerns.
Regards,
ARUN
I can be reached at:arunanalyst@rediffmail.com
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Tuesday, July 22, 2008
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