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“India will deliver stable and sustainable growth in an otherwise volatile global macroeconomic environment:” Asit Bhatia

February 22, 2024

Mr. Asit Bhatia
Vice Chairman of the Global
Corporate & Investment Banking Group at India
Bank of America

This is the first of a series of Expert Insights on 2024 that the Bombay Chamber of Commerce & Industry will be posting, featuring industry experts who will give their outlook on what this year has in store.

“Of the 22 countries that get into elections in 2024, India is amongst the important ones. While fiscal profligacy in the run up to elections is not unheard of, the current government is expected to continue its focus on some additional expenditure to fuel growth,” said Asit Bhatia, Vice Chairman of the Global Corporate & Investment Banking Group at India Bank of America, as he reflected on the economic outlook for 2024 amidst the evolving global economic landscape.

Bhatia anticipates a period of stability and growth, with India poised to deliver steady and sustainable growth despite the volatile global macroeconomic environment. “I see the next several years as a golden period for India,” he added, expressing confidence that India’s growth rate could exceed the anticipated 6.5-7% over the next couple of years.

 

Acknowledging the commendable job by the Government and the Reserve Bank of India (RBI) in managing inflationary pressures, Bhatia emphasised the potential for further growth. “Various factors underscore India’s resilience in the face of global economic challenges,” he noted, citing the Government’s infrastructure push, healthy corporate balance sheets, robust consumption narrative, and well-capitalised banks witnessing heightened credit growth.

 

Assessing the current business environment in India, Bhatia highlights robust macroeconomic fundamentals, including high growth, manageable fiscal deficits, controlled inflation, and improving current account deficits. “The Government’s reform-driven approach (GST, IBC, RERA, labor laws etc.) has improved ease of doing business in India,” he said. Bhatia cited the key factors that will influence investment decisions as political instability that will jeopardise policy continuity, external shocks from geopolitical issues and rate/policy paths of global central banks.

 

Anticipating the factors influencing investment decisions in 2024, Bhatia pointed to potential risks such as political instability and external shocks arising from geopolitical tensions. While he believes that no specific sectors of concern but underscores the attractiveness of India’s manufacturing and consumption narrative, the services sector catering to global demands, and the financial sector poised for substantial credit growth due to under-penetration.

 

Examining the role of government policies in shaping the business landscape in 2024, Bhatia emphasised their pivotal importance adding that taxation policies, capital controls, protectionism, and infrastructure development initiatives are significant determinants of economic growth. He anticipates a continued thrust on reforms from the government, conducive to attracting foreign investment and fostering domestic capex. “We see rapid infrastructure ramp up, de-carbonisation (500GW renewable capacity by FY30), step up in exports (on implementation of PLI schemes), opening up of government monopolies (privatisation), improving tax compliance (increasing tax filers), rising digitisation and financial inclusion to continue to provide scope for India’s corporate earnings to outpace its nominal GDP growth structurally.”

 

Amidst the optimism, however, he cautions against overlooking external factors such as geopolitical tensions and recessionary trends in developed nations, which could hinder India’s growth trajectory, “I do see the global geo-political situation, recessionary trends in some of the more developed countries, a global high-interest rate / inflationary environment, as some of the key factors that can hinder India’s growth, as we are now more than ever entwined with the global economy.”

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