[vc_row][vc_column][vc_column_text css=”.vc_custom_1675660171525{border-top-width: 1px !important;border-right-width: 1px !important;border-bottom-width: 1px !important;border-left-width: 1px !important;border-left-color: #000000 !important;border-left-style: solid !important;border-right-color: #000000 !important;border-right-style: solid !important;border-top-color: #000000 !important;border-top-style: solid !important;border-bottom-color: #000000 !important;border-bottom-style: solid !important;border-radius: 3px !important;}”]

HENRY R. KRAVIS INSIGHTS ON INDIAN ECONOMY

[/vc_column_text][vc_separator css=”.vc_custom_1647339034936{margin-bottom: 30px !important;}”][vc_column_text css=”.vc_custom_1675687703818{margin-bottom: 15px !important;}”]Henry R Kravis, co-founder of KKR & Co., one of the biggest player in the private equity industry, is an Indophile, who has been frequenting this country since 1998. “From a bankruptcy law to biometrics that supported one of the best instances of COVID management in the world to a much better tax structure than before and direct cash transfers cutting out a lot of graft in between, which was leading to a loss of productivity, all these have helped India under Prime Minister Narendra Modi outshine peers around the world”, he recently mentioned in an interview.

KKR & Co. Inc. has deployed capital to the tune of $10 billion dollars in sectors such as healthcare, digitization and technology and believes these and infrastructure to remain big themes for the coming cycles. However, he believes India still needs to deepen and broaden its capital market, both for corporate bonds and equities.

“The important thing for me is the need for more foreign investment in the country to strengthen corporate debt markets. If you build your debt markets, there’ll be more capital for growth in the country and the corporations. You’ve raised the limit on foreign ownership of insurance companies and I hope that money will come flowing in soon. The more capital you can bring in through them as a conduit to provide debt, capital and equity is very positive, and I urge the government to focus on this,” he said. However, government actions indicate a step in a diverging direction. Foreign portfolio investors are facing withholding tax concerns as the Centre did not provide any extension to concessional withholding tax rate, which is effective until June 30. In absence of any extension, the withholding tax rate would shoot upto 20%. Such an increase in the withholding tax rate would impact several leading foreign funds who are major investors in Indian debt markets, This will make debt fundraising increasingly expensive for India Inc. Some countries however will enjoy lower taxes if the country has a tax treaty with India. This is justified in part of the government, who will be seeing a decreased revenue from individual direct tax on account of increase rebate limit.

However, the case strong for India to emerge as a superpower in the coming years owing to a slew of measures that has increased efficiency in the system and cut costs. IMF’s forecast for India is among the highest for emerging markets and beats the growth rate of advanced economies as well.

[/vc_column_text][vc_single_image image=”72704″ img_size=”large” alignment=”center” css=”.vc_custom_1675687978405{margin-top: 20px !important;margin-bottom: 20px !important;}”][vc_column_text css=”.vc_custom_1675687728539{margin-bottom: 15px !important;}”]RBI has managed to control inflation better than many other developing and developed economies, increasing chances of a soft landing.

[/vc_column_text][vc_single_image image=”72703″ img_size=”large” alignment=”center” css=”.vc_custom_1675687903943{margin-top: 20px !important;margin-bottom: 20px !important;}”][vc_column_text css=”.vc_custom_1675687740556{margin-bottom: 15px !important;}”]Below is the graph showing steep increase in the gross domestic product at market price and the increase in population of the country. GDP at market prices in FY22 stood at INR 236 lakh crores!

[/vc_column_text][vc_single_image image=”72705″ img_size=”large” alignment=”center” css=”.vc_custom_1675688008556{margin-top: 20px !important;margin-bottom: 20px !important;}”][vc_column_text css=”.vc_custom_1675687814717{margin-bottom: 15px !important;}”]The growth in per capita GDP over a period of 17 years has grown at a CAGR of 11%, beating the rate of inflation.

[/vc_column_text][vc_single_image image=”72706″ img_size=”large” alignment=”center” css=”.vc_custom_1675688116567{margin-top: 20px !important;margin-bottom: 20px !important;}”][vc_column_text css=”.vc_custom_1675687824460{margin-bottom: 15px !important;}”]A commendable feat that the current political party in power has achieved is an increase in the number of bank accounts, specially in rural and semi-urban areas.

[/vc_column_text][vc_single_image image=”72707″ img_size=”large” alignment=”center” css=”.vc_custom_1675688157391{margin-top: 20px !important;margin-bottom: 20px !important;}”][vc_column_text css=”.vc_custom_1675687835948{margin-bottom: 15px !important;}”]The household sector has seen tremendous growth in financial assets over the years. The disparity between financial assets and financial liabilities shows the leverage potential that lies in the household sector, which will start to unleash as the Per capita GDP keeps increasing. Yield per hectare of all foodgrains (rice, wheat, corn etc.) and almost all commercial crops has been on an increasing trend and are at their maximum level. Similar is the trend in the minimum support price of foodgrains and commercial crops. They are rising and are currently at their maximum

[/vc_column_text][vc_single_image image=”72709″ img_size=”large” alignment=”center” css=”.vc_custom_1675688264286{margin-top: 20px !important;margin-bottom: 20px !important;}”][vc_column_text css=”.vc_custom_1675687851340{margin-bottom: 15px !important;}”]A sticky point in the level of non performing assets in the banking system, specially in the public sector banks. They reduce the operational efficiency of the bank and leads to a slowed growth as compared to peers from private or foreign sector.

[/vc_column_text][vc_single_image image=”72710″ img_size=”large” alignment=”center” css=”.vc_custom_1675688343579{margin-top: 20px !important;margin-bottom: 20px !important;}”][vc_column_text css=”.vc_custom_1675688514318{margin-bottom: 15px !important;}”]The Insolvency and Bankruptcy Code, 2016 (IBC) is an Indian law which creates a consolidated framework that governs insolvency and bankruptcy proceedings for companies, parentships firms, and individuals. Prior to the IBC, the legislative framework for insolvency and restructuring was fragmented across multiple legislations. IBC 2016 has bought a organisation in the restructuring and insolvency process, aiming to reduce the time taken to complete the entire process.

The Finance Ministry of India recently announced its desire to create a bad bank. The (NARCL) is a bad bank established to acquire non-performing assets (NPAs) from domestic banks totaling INR 2 lakh crore. A bad bank’s primary objective is stabilizing the banking sector, facilitating credit flow, and reestablishing investor confidence. These frequently purchase risky or problematic assets, such as loans that have lost value due to current market conditions or defaulted assets. A bad bank could also purchase financially viable assets to support banks in their efforts to restructure. 

“You’ve got about 700 million internet users here. You have a very young population, which is phenomenal. We look at that and say, how can we take advantage of that young population that is moving up into, hopefully over time, the middle class, and we want to take advantage of ecommerce and digitalisation,” Kravis said. Being a strong advocate of the government downsizing its role in business, he said, “I think this is tying up too much of the government’s capital.” To avoid political and labour backlash, he argued the government can dilute equity in sensitive sectors such as banks through the capital market route. “The more the Indian government can push out to the private sector, the more positive I think it’ll be. I think this is tying up too much of the government’s capital… In India, you have a great democracy and a lot of factions. So, the process may take longer but the government is on an absolutely right path to make things even better.”

During the most uncertain situations in recent times i.e the war following the covid outbreak, India stood out to be a ‘reverse goldilocks’ economy, where the global economy and policymakers are confronted with a stagflationary supply shock that is negative for growth and will tend to push up inflation further.[/vc_column_text][vc_zigzag][vc_column_text]

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