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The Leader and the Sign of the Times

Rising Global Risk (and its Implications for India)

Rising Global Risk (and its Implications for India)

The decade that has followed the global financial crisis of 2008 has been characterised by relatively steady, if uneven global growth. Economic growth for most major global economies like the United States, Germany, the UK and France recovered to pre-crisis levels within 4-5 years, and China began the transition of its economy away from an export-driven growth model, while avoiding a ‘hard landing’. Buoyed by these positive macro-economic trends, global equity markets reached all-time highs, and total global wealth reached US$280tn (27% higher than at the onset of the economic crisis). India also witnessed a recovery in economic growth levels, back to c. 8% levels helped by the global economic resurgence, the reform-agenda of the Modi new government, robust foreign direct investment flows and falling oil prices. Recently, however, cracks have begun to emerge in the global economy, driven by rising political uncertainty around the world, on-going trade disputes between the United States and China and financial instability across several emerging markets (including Russia, Brazil, South Africa, Turkey and Venezuela). The combined effect of these risks has driven economic volatility and sharp corrections in equity markets, as investors reallocate capital across geographies and asset classes to manage global macro-risk. India, given its inherent resilience and growth prospects, has the potential to buck the trend the of global capital flight from emerging markets if it is able to maintain its reforms and growth and thereby reassure investors that it is a relatively safer emerging market than others for international capital. The key to this will include India mobilising long-term capital, reforming its banking sector and facilitating global trade. This month’s Sign of the Times examines today’s emerging global risks and their implications on India, and the potential impact on its investment story.

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Transforming India’s Growth Model October 2018

Last month’s Sign of the Times benchmarked the economic performance of the current government against both its Congress and BJP predecessors over the past 25 years. Among the key takeaways of this analysis was the observation that there have been a number of Indian governments that have delivered growth and Mr. Modi’s government benchmarks well relative to them. Mr. Modi’s supporters believe that his government’s policies are the basis of sustainable growth trajectory based on having laid the foundation for a structural step-up in the country’s development. India’s macro-economic drivers – its population, demographics, urbanisation trends, education, among other major factors – point to a country with double digit GDP growth potential under a government with the right policies and economic development strategies. While previous governments have briefly achieved these growth rates on the back of massive stimulus or global economic booms, neither party to date has been able to construct an economic strategy or model that has delivered this growth consistently or sustainably.

As mentioned in last month’s Sign, voters in next year’s general election will need to form a view on, among other things, the economic agendas of the different parties to determine who can better pick up where the current government will have left off. Real leadership is more likely based on a clear vision of an India that has realized its potential and clarity on the political, social and economic components that will deliver this vision. India’s model will need to do more than simply deliver increased growth rates: it will need to respond to and where possible leverage the major geopolitical, economic and technological shifts underway and place the country into a position of strength in a world that is currently witnessing the passing of its current world order and the longer-term shift from the industrial to the information age.

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Reforms and Accelerating Growth are the Key to Political Power in India September 2018

The Indian general elections – the “world’s largest exercise in democracy” – will take place in a little less than a year from today with an electorate larger than that of all 34 OECD countries combined electing their parliamentary representatives. In the previous 2014 election, voters backed Mr. Modi’s promises of reform and his track record of delivering rapid growth in his home state. Economic growth and reforms again promise to be the key issues of the upcoming election, and the assessment of Mr. Modi’s economic performance is at the epi-centre of the narrative for both the BJP and the opposition.

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India’s Transformation Through to 2040, Overview of the Metrics of Industrial India vs. Information Age India July 2018

In 1991, India opened its economy to the rest of the world and reversed decades of slow and insular growth implementing a series of far-ranging reforms. There have been ups and downs in the years since; today however, a little over 25 years later, the effects of this liberalisation are clearly visible with India enjoying an increasingly vibrant domestic economy, a large and rapidly growing middle class, significant foreign investment inflows, and a high degree of political stability. Following one of the down swings, recent changes by the current administration have recovered some of the economic losses of the previous one and placed the India story back on the agenda of international investors. As the fastest growing and currently sixth largest economy in the world, India appears set to become a top three global economy and a middle-income country over the next c.25 years. This economic growth is set to transform the country, its society and its place in the world, creating a prosperous democracy of 1.4bn with a diversified and globalised economy. This month’s Sign of the Times plots India’s projected journey through to 2040 across five key economic and social metrics, benchmarking the country’s transformation to a series of global comparisons.

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Good News

Good News

A quick preview of the good news

Addressing India’s Literacy Challenge

The Frontline

Addressing India’s Literacy Challenge
A brief discussion with Sourav Banerjee, India Country Director for Room to Read, a global non-profit organisation whose mission is to tackle the problem of childhood literacy across the developing world

Investing in the New India Story

The Investor

Investing in the “New India Story” – our detailed thoughts on the opportunity and challenges of investing in India

The Big Picture TEST, Metrics

The Big Picture TEST, Metrics

Robust growth in manufacturing and imports offsets a slight reduction in exports in India. China’s exports and imports increase by 14% over the same period last month, while manufacturing activity expands.

This Month Through China’s Eyes

This Month Through China’s Eyes

Mike Pence’s speech on the US-China relationship, the announcement of Xinjiang detention camps and death of the journalist Jamal Khashoggi while in custody in the Saudi consulate

Last Month Through India’s Eyes

Last Month Through India’s Eyes

A landmark decriminalisation of homosexuality by the Supreme Court, controversy around a major arms purchase, credit concerns at a large infrastructure lender spark concerns

Pointing to the Future

Pointing to the Future

Implications of the US-China trade dispute, incumbency in India, China’s message to the world, India’s rising power as the world’s largest democracy, China’s great leap backward, the gulf in India’s foreign policy, mitigating India’s climate-change misery, state influence on China’s tech sector

Big News

Big News

India Purchases Russian Missiles Despite Possibility of US Sanctions, Head of CBI Sent on Forced Leave Amidst Public Spat, Indian Government Takes Control of Beleaguered Bank to Avert Crisis, US Intelligence Agencies Uncover Evidence of Chinese Spy Attack, Disappearances of High-Profile Citizens in China, China Misses its Third Quarter Growth Expectations

About Greater Pacific

Greater Pacific Capital is an investing institution designed to identify and develop investing opportunities based on the use of distinctive global macro thematic thinking, strategy development and the application of capital to its selected target markets Read More

vision and history

To create the leading platform to finance the growth and international positioning of enterprises in its target areas which for its first funds are in India and establish other links with global economies Read More

ideas and thinking

Succeeding in situations that are dynamically shaped by the aspirations of rising peoples, their society, markets and rapidly changing environments - where rules seem to apply but are often rewritten and so require unusual thinking. Read More

investments

We recognise the complex, nascent and rapidly developing and volatile nature of this ancient country's modern markets and economy as they grow and expand internationally and seek to work as partners with leaders who wish to create value from ideas. Read More

team

Our people are international and local, measured and open, imaginative and mathematical, a team and individuals, principals and counsel, skilled and learning... learning to open their own boundaries and others. Read More

philosophy

Our philosophy guides us and also places high demands upon us as we journey in a world that is changing dramatically all around us ... we endeavour to appreciate that the journey itself will make us more fit to journey. Read More

our locations

Greater Pacific Capital operates out of offices in Mumbai, Shanghai, Singapore and London. The firm's investors are international including from the US, Canada, Japan, Europe and the Middle East. Read More