India’s public and private sector investment in the last decade is more than the investment made in the previous 7 decades combined

According to a report presented by DSP Asset Managers, India spent US$8 trillion on new investments in the last decade, more than half of the investments made since the country’s independence.

Over the past seven and a half decades, since India’s independence in 1947, US$14 trillion has been spent on investment, which includes spending on housing by households, infrastructure creation by the government, and private capital spending.

India has spent US$8 trillion on new investments in the last 10 years. The government has been increasing capital expenditure allocation in each of its annual budgets.

The investments made in the last decade are expected to be replicated over the next five years as the base becomes larger, the DSP report said.

“The size of India’s annual investment is becoming too large to attract your immediate attention,” it said.

The report claims that India has come out of investment winter.

The investment to GDP ratio (measured as gross fixed capital formation to GDP) peaked in 2011 and remained low until the disruption caused by Covid affected supply chains.

Investment is coming back on a large scale through reforms and government spending after the pandemic.

“While the global economic outlook is a bit shaky, India remains a steady ship in turbulent waters. “Economic growth continues to be strong with continued growth in corporate top lines and profits.”

Over the past 12 months, most economies have seen a slowdown in their manufacturing sector or services or both, the report said, presenting a graph to support its arguments.

India’s manufacturing PMI can be seen at the top.

“India has seen steady growth in economic output and business sentiment over the past year,” it said.

“Its divergent economic trends have been the long-awaited, though never realized, outcome. But over the past year, India has shown a consistency that is perhaps the first evidence that India’s economic and business cycles can withstand global turmoil of manageable magnitude.

It said that behind the country’s growth story is a stable external situation.

Most emerging market currencies are struggling with negative carry against the US dollar, which has forced the central banks of these countries to be cautious in setting FX policy and their interest rates.

In India, the rupee has been stable over the past year, helped by a mix of strong current accounts, strong FPI flows, especially into debt markets, and the RBI’s wait-and-see approach.

“Strong service flows and remittances have been a major pillar of support that has kept India’s macroeconomic outlook stable.”

Referring to India’s stock markets, which are touching new highs time and again, it said that India has now become the second largest equity market among emerging markets. India’s share in emerging markets has increased from 7.8 percent in 2020 to 17.7 percent currently.

This substantial growth is mainly attributed to the increased profitability of companies, surpassing their pre-Covid growth rates and the consistent performance of equity indices, it said, providing the rationale for this stellar performance.

Explaining what contributed to the healthy level of profits for corporate India, it said rising earnings and stable profit margins for Indian companies and a relatively stable fiscal and tax regime helped.

However, it also warned that Indian equities are no longer a bargain and lack safety.

India’s GDP size currently ranks 5th after America, China, Germany and Japan. It overtook the UK in 2022.

Just a decade ago, Indian GDP was the eleventh largest in the world. Currently, India’s GDP is estimated to be around US$3.7 trillion.

India’s GDP grew by a massive 8.4 per cent during the October-December quarter of fiscal year 2023-24, and the country remains the fastest growing major economy and is set to maintain its growth trajectory going forward.

According to the latest World Economic Outlook of the International Monetary Fund, India will remain the fastest growing economy among major economies in 2024. The IMF has raised India’s growth forecast for 2024 to 6.8 per cent from 6.5 per cent in its latest outlook.

India’s economy is expected to grow by 7.2 percent in 2022-23 and 8.7 percent in 2021-22 respectively.