Ridham Desai predicts a very bullish story for equities, capex boom in next 3 years
Ridham Desai, Head of India Research and Chief India Equity Strategist,Morgan Stanley, says India is in a strong position and there's no need for concern. However, stricter policies could pose challenges in the latter half of next year. The recent growth slowdown was temporary, influenced by elections and heavy rains. By the end of September, the government's cash balance with the RBI was nearly Rs 3.6 trillion, indicating deferred spending, resulting in a fiscal deficit of 3.4%, well below the 4.9% target. The government's cash balance has now decreased to below Rs 60,000 crore, and since October 1, they have spent Rs 3 lakh crore in addition to tax revenues.
Desai says India will be one of the rare exceptions which will stop borrowing to pay interest in about three years and will move to primary balance. When that happens, government debt to GDP will fall because nominal GDP in India is still 10-11%. It will create major space for the private sector to re-lever and a major lending boom in the private sector can be expected, accompanied by a big capex cycle.
There are too many moving parts. There is a Trump trade one side, there is a long live China trade on one side. And there is a sell India expensive trade or quit India movement which FIIs have adopted. A lot of things are shaking in the world right now?
Ridham Desai: I am in the sidelines of a summit in Singapore. Coming to your question, yes, of course, there are moving parts. There is nothing different from any point in time in life. There are always moving
