INDIA's NEXT $ 1 TRILLION GDP IN NEXT 3 YEARS --Rest Depends on Governance.

 

Well, India will get its next $1 trillion GDP growth within the next 3 years provided governance remains steady.  India is just on the verge of getting not only homegrown GDP growth opportunities but also export oriented matched with FDI increase. In the coming years, Nifty will scale new highs based on the macroeconomic front and not on speculative valuations.   Get ready for more PLI schemes to come up and get India as the manufacturing hub in the coming few years.  The demand for steel, cement, and other infrastructure supplies will amplify in the coming years.  The equity stock segment will attract valuations and growth from the upcoming Tsunami of infrastructure demand. The Indian IT industry will also get significant demand growth over the next 2 to 5 years or 10 years as the demand makeover is in process. At the same time, the Indian stock market will scale up to a new high provided the same governance remains intact as it is today.

Last Friday the $1.2 trillion infrastructure bill designed for a package of highway, broadband, and other infrastructure improvements will drive growth for the manufacturing of India.  We will find cross broader trades and investments growing up and taking a quantum leap for Indian manufacturing. We will see joint ventures coming up and FDI inflows picking up in India. This will also bring growth for the Indian corporate and for the equity markets. The infrastructure bill will funnel $4.7 billion for federal-aid highway apportioned programs and $605 million for bridge replacement and repairs. Much of the funds are expected to come in waves and via grants over the next five years.

According to the White House, 173,000 total miles of America's highways and major roads and 45,000 bridges are in poor condition. And the almost 40 billion for bridges is the single largest dedicated bridge investment since the construction of the interstate highway system. The bill would spend 25 billion to improve runways, gates, and taxiways at airports and to improve terminals. It would also improve the aging infrastructure at the air traffic control system.

The Internet broadband up-gradation brings significant growth for the data and IT service Industry. We will find AI and big data analytics taking a quantum jump and redesigning the whole new consumption, pricing, and product delivery from the U.S market. The U.S EV market will find a significant boost up and companies like Tesla will grow into new highs and more technology-driven opportunities and growth scale will come up in coming years from the U.S. The EV segment and its ancillary will find significant demand from this bill and India should strategies to make a quantum gain from these opportunities as manufacturing and supply of goods at the low cost of production is the going to be in high demand. India should utilize the China +1 strategy and make its growth plans accordingly.

 The bill includes $7.5 billion promised to help establish a nationwide network of EV charging stations. Furthermore, an additional $65 billion will be invested toward overall clean energy and renewable for the US electricity grid, hardening a long antiquated system.

When we dig further into the bills of the $1.2 trillion Infrastructure bill we find that it includes $550 billion in new spending and includes the following:

• $110 billion for roads, bridges, and other infrastructure rehabs nationwide (The US infrastructure system earned a C- from the American Society of Civil Engineers earlier this year)
• $7.5 billion for electric vehicles and EV charging infrastructure
• $2.5 billion in zero-emission buses
• $2.5 billion in low-emission buses

 The U.S will create Blue collar jobs and these jobs will drive consumption and hence the GDP growth of the U.S will accelerate in the coming years.  Unemployment numbers will come down and people will get good leaving and less burden on the federal budget in the coming years. The shape of the U.S economy will change in coming years based on these types of bills. The EV market particularly will have radical changes in the coming 1 year which will speed up the growth of the industry across the globe. 

Now the question might come up why the U.S can’t build a manufacturing and supply chain for the demand of the goods going to come up from this homegrown infrastructure bill. The reason is a simple time to build and the cost to build. The cost of production in the U.S is high and the recent wage hikes to the tune of 4.9% in October compared to September speak enough about the ground issues.

It is easier for U.S companies to invest in overseas manufacturing hubs through FDI which will help them to scale up.  The current Indian government has the significant advantage of good governance and simplification of the process which is quite exciting for the Indian economy.   The journey of this bill does not end here and we will find many such bills coming up once the current government of the U.S gets success from these measures.

The debt market will soar and new debt papers will flood the streets of the U.S in the coming years as many of them will raise capital to be part of this infrastructure bill.   India is having a demographic advantage and this incites vast opportunities for India to be the next manufacturing hub.   Business opportunities in India will grow and with NCLT and GST in place, we find that Indian economic revenue growth will be significantly high in the coming years.  As I said in the beginning if India’s governance remains intact as it is today we will find the next trillion being added quickly.  The stock market will reflect sector-specific and stock-specific value identification as the underline FDI kicks in.