India: The Destination for Consumption and Growth

The BSE Sensex rallied around 500 points intraday on 13 April due to the buying of blue chip
stocks and better macroeconomic data. Industrial production grew 2% in February after being
negative for 3 months and the retail inflation fall to a low of 4.83% in March. The after effect
of the RBI rate cut of repo to 0.25 bases was also visible. The rupee was also trading up by 6
paisa. These effects created a positive sentiment for the stock market.
The meteorological department news on the better monsoon as compared to the last two years
has also created positive vibes among the investor to believe in the India story. The
International Monetary Fund latest economic outlook report has forecasted India to grow at
7.5 % in 2016-17 outpacing china by at least a percent. These are key indicators of a better
growth and development of India. Given a weak global market with positive signs from the
Asian market lately, India can be a source of positive light.
Consumption as a theme is core to the rising growth in India. A large population with
aspirations & money in hand results in consumption & spending. As quoted by our PM, India
has three pillars of Democracy, Demography and Demand and with the new addition of
deregulation by the government; the 4-Dimension has improved sentiments for investment.
The add-on of RBI rate cut and 7th pay commission ensures that there is enough liquidity in
the market. This ignites the engine of growth and keeps investment cycle rolling.
The lowering of the commodity prices, a range of supply side measures and a tighter
monetary policy has resulted in faster than thought fall in inflation thereby allowing central
bank for further rate cuts. IMF said that inflation based on the consumer price index is
projected to be around 5.3 percent in 2016.Growth in India and China has been broadly in
line with projections, but trade growth has slowed down noticeably. Trade slowdown is
caused by declining investments growth among the emerging markets and also sharp scaling
of commodity exporters.
Brent crude, comprising 79% of Indias imports, trading at $34.77/barrel is a respite for India.
The escalation of IIP from 3% to 9.8% from April to November in 2015 and the composite
PMI of 53.3 indicate expansion. Though India has benefited from falling global oil prices, the
trade balance has not improved much given Indian exports have contracted for 15
consecutive months.
Indias growth will be driven by private consumption, which has got fuel from lower energy
prices and higher real incomes. The revival of investors sentiment resulting in more FIIs,
pick up of industrial activity & recovery of private investment is further adding to the growth.
Be it energy, fuel or infrastructure India stands as the large consumer which is creating
demand, thus creating jobs resulting in growth and higher disposable income.
The major pointers to be tackled judiciously are
a) Managing macroeconomic recovery which has already shown positive signs in terms of
Industrial production and inflation
b) Containing fiscal deficit by policy interventions on revenue and expenditure fronts
c) Wooing long term investment by setting up mechanism for making investment easier.
Already some measures are taken resulting in Indias better ranking in ease of doing business.

Government has also digitized the Industrial license and Industrial Entrepreneur
memorandum process through online portal.
d) Developing Industry friendly Infrastructure- besides the Make in India campaign
there is a growing need for training efforts across geographies, communities and industry
sectors to build a labour pool equipped with the skills that the industry needs.
e) Deepening digital governance- Digital India is a step towards e-governance. If it can
achieve last mile broadband connectivity, support development of digital entities and cloud
platform for citizens, it would bring a revolutionary change in transparency, accountability
and speed of transactions.
Though the world would grow at about 3.5%, India is likely to expand at about 7.5%. The
credit also goes to the various investment themes like Make in India, skill India, Digital India,
start-up India. India is poised to be a one stop halt to the travellers aka investors who want a
destination of returns in future. It will also serve well for those who are wandering for a
diverse market for consumption. Thus the twin sunshine of investment and consumption
centre will attract the world towards Indias shores.

References
http://www.ibef.org/industry
http://www.dnaindia.com/money/
http://data.worldbank.org/indicator/
https//googleweblight.com
http://www.manilatimes.net
http://www.theguardian.com/business/2015/
http://articles.economictimes.indiatimes.com
http://www.hindustantimes.com/business/
http://www.thehindu.com/business/Economy/
http://www.rediff.com/business/

Name-Preet Jain
Institute-NMIMS, Mumbai
Batch-2015-2017