Bombay plan 1944: Cognizant of the gaps post independence and the need to broad base industrial growth in India, a group of industrialists comprising JRD Tata, Ghanshyam Das Birla, Sir Purshotamdas Thakurdas, among others, banded together to imagine what independent India’s economy would look like. They published a plan for economic development for India, commonly known as the Bombay Plan, 1944:
It agreed on the need for rapid industrialization and central planning;
It saw an expanded role for India in global trade;
It saw support from government for development of private sector, rather than control;
It envisaged a doubling of India’s per capita income within 15 years;
It called for creating industries for the production of power & capital goods;
It targeted doubling of share of industry in economy from 17% to 35%.
However, the Congress appointed National Planning Committee (NPC) wanted government ownership of industry. The Bombay Plan, 1944 was an early example of private sector led efforts to design an economic roadmap for India but it did not pan out as expected because of differences with National Planning Committee.
Source: Amitabh Kant authored Made In India
Quote of the month
The real way to build wealth in the long run, is to find a limited number of things with a lot of potential, and not too much risk, and stay with them for the long term.
-Howard Marks
In the long run, GDP, corporate profits and stock market (Nifty) moves in line. As of today, we are a $3 trillion economy. As per estimates, India will reach $30 trillion economy by 2047 – Stock market may also touch new highs in the times to come (but with volatility).
From the global leaders:
“India is a hugely exciting market for us and is a major focus. We’re putting a lot of emphasis on the market. I’m very bullish on India.” – Tim Cook, CEO, Apple
‘India Will Have The Fastest Growth Rate‘, says Ray Dalio, American billionaire investor and founder of world’s biggest hedge fund at the World Government Summit
India a much more straightforward long-term story than China: Chris Wood, Global Head of Equity Strategy at Jefferies
Indian macro dataflow remained strong:
Manufacturing PMI: Manufacturing PMI rises to three month high of 56.4 in March and remained in expansion zone (>50 points) for the 21st straight month;
Services PMI: Services PMI slowed to 57.8 in March after a 12-year high in February but remained in expansion zone (>50 points) for the 20th straight month;
GST Collection: Collections of Rs. 1.6 lac crores in March was second highest collection ever;
Credit growth: Driven by strong demand for personal loans, NBFC growth and liquidity crunch, credit offtake grew by 15 per cent YoY in March. With this, India witnessed the sharpest rise in borrowings in last eleven years;
Inflation: March CPI inflation seen at 15-month low of 5.7%;
Forex: India’s foreign exchange reserves stood at $578 billion as of March 31;
GDP: Basis latest estimates, GDP likely to grow at 7% in FY23;
Trade Deficit: narrowed in February to USD 17.4 Bn as compared to USD 17.7 Bn in Jan.
Equities:
Domestic equity markets remained flat in the month of March with Nifty ending with a marginal gain of 0.3%;
Smallcap 250 and Midcap 150 index marginally underperformed Nifty;
FPIs bought Rs. 12,578 cr. of Indian equities in the month of March;
Mutual Funds SIP inflows remain in elevated zone at Rs. 13,000 cr.+ for the month of March reflecting the strong belief of Indian investors in equities.
The Indian equities have witnessed a time correction in the last one year (Increase in corporate profits leading to fall in valuations without any major fall in prices). Fund managers across industry have started to increase exposure to equities.
Fixed income:
RBI did not hike repo rate in the month of March;
The 10Y G-Sec crashed from high of 7.46 to 7.219 as of April 12, 2023;
The current curve remains very flat with everything in corporate bonds beyond 1 year up to 15 years is available @7.-7.65% range.
Despite high interest rates, there is high liquidity crunch in the system. Average systemic liquidity deficit stood at Rs. 31 Bn in March 2023 as compared to a deficit of Rs. 58 Bn in February 2023.
Outlook:
The broad indices have not corrected as much as individual stocks. The Nifty 500 barely moved on a 6 month basis even though nearly 45% stocks have corrected by more than 10%. There are many unknowns ahead such as monsoons and oil prices yet we trust the resilience of the Indian economy and believe that a SIP into a diversified fund such as our Midcap, Flexicap, Smallcap
will be the best way to ride out these uncertainties.
Growth stocks have taken a hit after rise in interest rates. Since, RBI is near the peak of interest rate cycle, we expect the growth stocks to outperform in the next three-five year period after the rate cut cycle starts. Depending upon the risk profile, one may take exposure to mutual funds investing in growth stocks in a staggered manner of nine months.
