Indian economy to benefit from reforms

Indian economy to benefit from reforms

India is set to benefit from a number of economic reforms undertaken by the government despite several “teething problems”, according to boutique asset manager India Avenue.


The country’s recent demonetisation and the introduction of a goods and services tax will improve transparency within the country’s economy and broaden the nation’s tax base, said India Avenue managing director Mugunthan Siva, despite the short-term challenges the changes have presented.

“There are currently some teething problems as the economy adjusts to demonetisation but overall it has been well-received,” Mr Siva said.

“It has caused investors some short-term pain. But we expect a long-term gain as demonetisation will be good for investment.”

Additionally, Mr Siva noted that the protectionist trade policies proposed by US President Donald Trump will not affect India as greatly as other emerging markets.

“Enormous domestic growth sets India apart as an investment destination. It’s not as reliant on other markets and trading partners as China, Japan and many other Asian economies,” he said.

Mr Siva said domestic consumption accounts for 60 per cent of India’s GDP, compared with 37 per cent in China.

“India also offers good diversification for Australian investors because its economic make-up is radically different from Australia – for example, when commodities prices are down Australia suffers but India benefits,” he said.

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