Investing in India
Posted by aarti singh on September 9th, 2016
While there is no doubt that the potential building blocks for a very strong economic growth story in India have been there for some time, some analysts and investors have been slightly disappointed at the speed of growth and development. This is a country with an absolutely enormous population, large spread of business skills and one which has been attracting overseas investment and overseas companies for many years now. However, despite the fact that India is now seen as one of the more prominent economies around the world, with massive potential for long-term growth, the performance in the short to medium term has been disappointing.
Economic growth in India
Over the last few years, prior to the credit crunch and worldwide recession, economic growth in India has been around about 7% per annum. This is very impressive and has attracted significant overseas investment and new companies to the country. Services industry, manufacturing and technology are now very prominent within the economic growth story for India and many analysts believe it is just a matter of time before it joins the top table of economic powerhouses around the world.
However, one of the major problems for the Indian economy and the Indian government is the massive diversity of wealth in the region. Despite the fact that those at the higher end of the income scale are enjoying the millionaire lifestyle there are still millions of people surviving on just a couple of dollars a day. Until we see underlying improvement in the poverty situation many believe this will hold back economic growth in the medium term.
The political situation in India
Despite the fact that the historic political situation in India has been very difficult to forecast and often very controversial there is no doubt that the recent changes to the economy can be traced back to new economic policies introduced back in 1990. This is the year in which we effectively saw a change from the socialist policies and socialist principles of years gone by towards the free-market economy which we see today. Once the Indian government decided to open up business arenas to both domestic and overseas investors, and welcomed overseas companies to the country, this was most certainly a green light for a new economic era and investment era for the country.
Ways to invest in India
As with the likes of China, there are hundreds of very prominent companies around the world which have significant exposure to India, whether via partnerships or overall control of domestic companies. As a consequence it is relatively easy to gain exposure via direct equities, collective investments or exchange traded funds although as with any investment you should take professional advice at the earliest opportunity. The risk/reward ratio for each of these different investment vehicles is very different and you will need to align the specific risks to your own risk profile, investment in India strategy and financial requirements for the future.
In the opinion of many people India has been a success story waiting to happen although we have seen a number of delays along the way. Whether now is the time for the Indian economy to push forward and fulfill the forecast potential which many people see remains to be seen but the more markets opened up to overseas and domestic investors the more transparent the economy becomes - which should lead to a reduction in the risk profile.
About the Authoraarti singh
Joined: August 29th, 2016
Articles Posted: 12
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