India yet to ‘unlock its full potential’: Amundi



European asset management firm Amundi has urged investors to turn their attention towards India, which is positioned for strong growth over the next decade.
The South Asian nation overtook China with the largest population in the world. However, demographics was just the beginning, said Monica Defend, head of Amundi Institute.
Amundi expected global GDP growth to average at 5.2 per cent per year across the coming decade. Emerging markets could see a 3.7 per cent growth, compared to developed markets’ marginal 1 per cent prediction.
“This year alone, India is projected to contribute up to 15 per cent of global growth, second only to China and more than Europe or the United States,” Defend commented.
“India has all the necessary components to become a key engine for global growth, but must overcome several obstacles before it can unlock its full potential.”
The need for new investments would underpin the growth, alongside government support that would stimulate investment activity in new sectors.
“Initiatives like the Production-Linked Incentives (PLI) scheme can help boost manufacturing by wresting some supply chains away from China, propel exports, and attract rapidly growing industries like semiconductors, electric vehicles, and renewables that are of strategic geopolitical importance,” Defend said.
Defend believed India was a powerful broker between the East and West, as the country maintained relations with both global powers.
Moreover, India’s government was focused on decreasing its budget deficit from 6.4 per cent currently to 4.5 per cent by 2026.
“We therefore view 2023 as a year of transition for India, characterised by a modest slowdown in growth, but also a stabilisation that sets the stage for a sustainable recovery. India seems poised for a prolonged period of upward economic growth and improved earnings, primarily fuelled by a revival in manufacturing and investments,” Defend said.
Investors could see rewarding opportunities in education, skill development, and job creation that were accommodating the rising number of young workers in India.
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