Thread by @SubramanianKri

🧵#9YearsOfPMModi #PhenomenalEconomicChanges
Jefferies, a Global Investment Bank, notes in its periodic report GREED&FEAR that “the dramatic changes wrought by Modi after 10yrs in power have been phenomenal.” 🧵using Jefferies' report 1/22

#9YearsOfPMModi #PositiveEconomicOutlier Combine Jefferies' observation w/ this fact: For the 1st time since independence, India is a +ve outlier on both macro-fundamentals and economic growth. That itself is testimony to #PhenomenalEconomicChanges in #9YearsOfPMModi. 2/22

#9YearsOfPMModi #InflatioTrendsDown
CPI Inflation and Core Inflation are trending down. The expectation is that inflation should run around 5% for the rest of this year which is below the upper band of the RBI’s target, namely 6%. 3/22

#9YearsOfPMModi #HugeInvestmentInInfra
An obvious point is the transformation of physical infrastructure, where the fiscal deficit has in recent years been primarily spent on investing in infrastructure and not on entitlements. The result is that the huge deficiencies... 4/22

...in infrastructure, so visible when GREED&FEAR first visited India on a business trip back in 1996, have now been largely addressed. This has to lead to an improvement in the return of capital with one example among many the nearing completion of the two dedicated...5/22

...freight rail corridors. This will massively reduce the time moving goods from Delhi to Mumbai, for example, from at least 24 hours to 12-15 hours. At present bulk commodities are largely moved by roads with the exception of coal where rail is more dominant... 6/22

The Modi government’s stated aim is to reduce the cost of logistics from the current 14-16% of GDP to 9% in the next three years. 7/22

#9YearsOfPMModi #TechnologyForWelfare
Another which impacts everybody is the distribution of targeted welfare via the use of technology. The practical result of DBT has been a dramatic decline in leakages in the distribution of welfare. 8/22

#9YearsOfPMModi #GiantDigitalEconomy
Then there is the massively successful UPI. Transactions on it are now running at 8.9bn a month in volume terms and Rs14.1tn (US$172bn) in value terms. UPI transactions totalled Rs139tn (US$1.7tn) last fiscal year. 9/22

#9YearsOfPMModi #UnjustCriticism
Jefferies report that "Critical coverage of Modi in the Western media (bcos) most of their Indian correspondents talk only to the traditionally champagne-socialist intelligentsia so visible on English language Indian TV channels... 10/22

#9YearsOfPMModi #UnjustCriticism
...They have found themselves removed from all forms of influence in Delhi since Modi took power in 2014. Such people are willing to air their frustrations to anybody prepared to listen... 11/22

#9YearsOfPMModi #UnjustCriticism
...GREED&FEAR heard this week about one Indian correspondent for a prominent US daily newspaper who admitted to knowing no one in the BJP just before leaving the country." 12/22

#9YearsOfPMModi #SelfConfidentIndia
Just as GREED & fear noted recently that Chinese people post-pandemic no longer have an unbridled confidence in the future of their country, the reverse now applies in India amidst much fashionable talk, which is no longer completely...13/22

#9YearsOfPMModi #SelfConfidentIndia
...far-fetched, of India becoming the major beneficiary of production being moved out of China in the next ten years. Apple’s CEO Tim Cook went to great lengths to highlight India in his most recent quarterly earnings call on 4 May. 14/22

#9YearsOfPMModi #SelfConfidentIndia
...Tim Cook mentioned the country no less than 20 times, not only as regards to its importance as a growing consumer market for iPhones but also as a growing source of production. 15/22

#9YearsOfPMModi #SelfConfidentIndia
The other way India’s increased national self-confidence has been manifested on the world stage in the past year and more has been as regards its purchasing of cheap Russian oil. 16/22

#9YearsOfPMModi #DriversOfDemand
As for the drivers of economic growth, hopes continue to build for a capex cycle while the residential property market has now entered the third year of an upturn. GREED&FEAR continues to believe that this property cycle can run for... 17/22

...at least another three to four years given the seven-year duration of the preceding downturn and the resulting pent-up demand. 18/22

#9YearsOfPMModi #VirtuousCycle
Gross fixed capital formation has begun to move up as a percentage of nominal GDP, which should accelerate the #VirtuousCycle whose key driver is private investment. This is complemented by bottom-up evidence that private sector new project... 19/22

...announcements, a good leading indicator, are surging. Private new project announcements have risen from Rs5.1tn in FY21 to Rs25.7tn in FY23. While the order books of industrial companies are growing. For example, Larsen & Toubro’s order flow rose by 19% YoY in FY23. 20/22

#9YearsOfPMModi #VirtuousCycle Pickup in capital formation should be the start of a multi-year trend as dramatic deleveraging of corporate balance sheets has happened. The corporate debt-to-equity ratio for large listed companies is 0.6x, the lowest
level since FY06. 21/22

#9YearsOfPMModi #VirtuousCycle
Most interestingly, from a global perspective, India’s private sector has deleveraged in the past ten years, a period during which most of the rest of the world has seen private sectors increasing leverage. 22/22 End🧵