As the world gears up to slowly move beyond the covid-19 pandemic, India is undoubtedly one of the countries ahead of the curve.
The vast majority of people are now able to go back to their normal lives without any lockdown restrictions in place.
According to Johns Hopkins University of Medicine, India’s covid mortality rate is at 1.3% per 100,000 population – one of the lowest in the world – although it has recently experienced a spike in cases.
Additionally, more than 30 million people have already received the vaccine in the country so far, reported British national broadcaster BBC, with the government pledging to cover the most vulnerable 250 million by the end of July 2021.
Avinash Vazirani, manager of the Jupiter India Fund, said: “India is especially well-placed for covid vaccinations, as the country manufactures around 60% of the world’s supply of vaccines.
“We think that India’s world class healthcare and pharmaceutical industry will be a beneficiary of long-term trends for the treatment of and vaccination against covid.”
High confidence
India’s speedy recovery from the pandemic provides a positive economic backdrop for the country and has the potential to generate investor interest in its growing sectors.
Vazirani added: “Our outlook is also positive for India’s economic growth in general. Economic activity has been trending above pre-covid levels since January.
“According to the Federation of Indian Chambers of Commerce & Industry (FICCI), business confidence in March is at a decadal high, with companies not only seeing a recovery in demand, but also the potential for higher investment over the coming quarters.
“The government has a track record of surprising positively on policy, including its introduction of a simplified Goods & Services Tax in 2017, its substantially lowering corporation tax in 2019, and its introduction of production-linked incentives for private sector manufacturers, among other initiatives.
“We think these types of changes benefit companies in the formal, organised economy, with smaller players in the informal economy likely to lose out on market share.”
Spending
Prime minister Modi’s latest budget took a ‘pro-growth’ stance, as opposed to the lack of economic support from the state experienced during 2020.
“The finance minister announced that there would be increased public spending on infrastructure and healthcare,” Vazirani said. “While we think revival of capital expenditure investment from companies may take a few more quarters, it is not just the public sector that is expected to benefit from elevated government spending.
“For instance, private sector engineering company L&T has reported a 76% increase in order inflows for the quarter ended 31 December 2020.
“Public spending is not the only opportunity here – covid seems to have kick-started India’s drive for reform, with ongoing reforms in agriculture, land and labour laws expected to have long-term benefits for the country.
“In a speech in February 2021, prime minister Modi reiterated that the government has ‘no business to be in business’, and indeed there are several large public sector companies that are in the process of being privatised, such as Bharat Petroleum and Air India.”
And, as the country sails through the aftermath of covid, financial advisers to non-resident Indians (NRIs) have been urging their clients to take advantage of India’s economic rebound.
Sustainable progress
“India is going through a period of very rapid change,” Vazirani added, as the country’s move to renewable energy sources is already growing and is expected to continue doing so.
“The government has done an excellent job on providing basic facilities to its citizens – now over 99% of Indian households have access to a bank account, and more than 95% of the population has electricity – from less than 60% at the turn of the century.
“Electricity generation capacity from renewable, nuclear and hydroelectric sources has already reached 38% of installed capacity, although not all of this has ramped up to full use, and India looks set to smash its Paris target of reducing carbon emissions by 35% by 2030.
“Not only does this progress have ESG implications, and we see companies in India making steady progress on ESG metrics, but it also offers new investment opportunities.
“Covid lockdowns have accelerated India’s use of mobile data and the internet. India currently has more than 500 million internet users, but e-commerce and other online opportunities are still nascent.
“There are more than 100 ‘unicorns’ – start-ups with a market cap above $1bn (£725m, €841m) – in India10, and we think that many of them will look to list on the stock market during the next few years.”
