PM Narendra Modi's 10th year in office: What Bernstein says on stock market, economy
Bernstein said India is still lagging at 127th in the world when it comes to GDP per capita, but the ranking has improved from 147th in 2014. Despite Covid shocks, the growth has been a healthy 6.2 per cent, it said.
- Jul 19, 2023,
- Updated Jul 19, 2023 12:25 PM IST
India has seen tremendous progress in several areas, including digitisation, formalisation of the economy, a better policy environment to attract investments for manufacturing initiatives and a step up in infrastructure spending, Bernstein said in its latest note.
"The building blocks have been put in place, and although economic growth has been sluggish for several years in the past decade - part of that was unwinding the excesses and strengthening the economy through new reform initiatives. The building blocks are clearly in place for a positive India cycle as long as the continuity of policies remains," it said in July 17.
Bernstein said it remains positive on the broader markets, even as it sees room for some moderation in H2FY24 macros, as the cycle view will continue to limit downside risks.
It's been over 9 years since Narendra Modi took oath as the Prime Minister of India, after a landslide victory over promises of "good days", economic growth, reducing redtapism, ending corruption and improving the overall business sentiment," it said.
As India heads to general elections in 10 months from now, Bernstein looked at the performance of India under PM Modi for the last 9 years and compared it with the previous regimes. It said looking at the past nine years' performance of PM Modi, the work has been stellar on many fronts, decent on some while below average on a few parameters.
"Overall, the economic growth has been fairly robust. There was a slowdown from FY19 due to weak consumer demand, reduced investment confidence amidst the trade war, and continued hurdles faced by the MSME sector after GST implementation a year prior. Covid in March 2020 added to the woes, but there has been a sharp and resilient rebound. Hence, despite challenges, the economy has continued to move forward at a good pace. With the base effect having eased, FY24 will better narrate the post-COVID economic tale of India," it said.
Bernstein said India is still lagging at 127th in the world when it comes to GDP per capita but the ranking has improved from 147th in 2014, and despite the COVID shocks, the growth in this parameter has been a healthy 6.2 per cent.
"The incremental change per annum under PM Modi has moved to almost $400 from $250 seen during 2004-14. With the base still lower compared to all BRICS peers, India needs even more push to catapult itself out of the "lower middle income" band," it said.
In terms of inflation, Bernstein said keeping prices of essential commodities in check was one of the major promises of PM Modi back in 2014, especially as inflation had begun to erode the purchasing power of the common man heavily during UPA2.
"This has been one metric where the current government has consistently performed better than the previous regime and has been proactive in dealing, especially when it comes to food prices," it said.
Bernstein said generating jobs was a key promise made during the campaigns. Several programs were launched to accelerate employment generation, from Skill India to Make in India. "However, job generation remains weak, and labour force participation declined from 40 per cent in FY22 to 39.5 per cent in FY23, it said.
Bernstein said 'Make in India' is yet to pick up but there is promise of better phase ahead. It said roads are expanding at double the pace, ports have seen capacity expansion and there has been a scale-up in railways investment. Business perception has improved with a large jump in ease of business indicators but The corruption perception index is still languishing.
India has seen tremendous progress in several areas, including digitisation, formalisation of the economy, a better policy environment to attract investments for manufacturing initiatives and a step up in infrastructure spending, Bernstein said in its latest note.
"The building blocks have been put in place, and although economic growth has been sluggish for several years in the past decade - part of that was unwinding the excesses and strengthening the economy through new reform initiatives. The building blocks are clearly in place for a positive India cycle as long as the continuity of policies remains," it said in July 17.
Bernstein said it remains positive on the broader markets, even as it sees room for some moderation in H2FY24 macros, as the cycle view will continue to limit downside risks.
It's been over 9 years since Narendra Modi took oath as the Prime Minister of India, after a landslide victory over promises of "good days", economic growth, reducing redtapism, ending corruption and improving the overall business sentiment," it said.
As India heads to general elections in 10 months from now, Bernstein looked at the performance of India under PM Modi for the last 9 years and compared it with the previous regimes. It said looking at the past nine years' performance of PM Modi, the work has been stellar on many fronts, decent on some while below average on a few parameters.
"Overall, the economic growth has been fairly robust. There was a slowdown from FY19 due to weak consumer demand, reduced investment confidence amidst the trade war, and continued hurdles faced by the MSME sector after GST implementation a year prior. Covid in March 2020 added to the woes, but there has been a sharp and resilient rebound. Hence, despite challenges, the economy has continued to move forward at a good pace. With the base effect having eased, FY24 will better narrate the post-COVID economic tale of India," it said.
Bernstein said India is still lagging at 127th in the world when it comes to GDP per capita but the ranking has improved from 147th in 2014, and despite the COVID shocks, the growth in this parameter has been a healthy 6.2 per cent.
"The incremental change per annum under PM Modi has moved to almost $400 from $250 seen during 2004-14. With the base still lower compared to all BRICS peers, India needs even more push to catapult itself out of the "lower middle income" band," it said.
In terms of inflation, Bernstein said keeping prices of essential commodities in check was one of the major promises of PM Modi back in 2014, especially as inflation had begun to erode the purchasing power of the common man heavily during UPA2.
"This has been one metric where the current government has consistently performed better than the previous regime and has been proactive in dealing, especially when it comes to food prices," it said.
Bernstein said generating jobs was a key promise made during the campaigns. Several programs were launched to accelerate employment generation, from Skill India to Make in India. "However, job generation remains weak, and labour force participation declined from 40 per cent in FY22 to 39.5 per cent in FY23, it said.
Bernstein said 'Make in India' is yet to pick up but there is promise of better phase ahead. It said roads are expanding at double the pace, ports have seen capacity expansion and there has been a scale-up in railways investment. Business perception has improved with a large jump in ease of business indicators but The corruption perception index is still languishing.