Economy & Markets - Chetan Ahya, Managing Director, Morgan Stanley Asia
Source: PTI
See gradual investment pick-up in India
Morgan Stanley Asia is looking at a gradual improvement in the investment activities in India. Investors have reacted well to recent announcements of Foreign Direct Investment in retail and reduction in subsidy by hiking diesel prices, but high inflation rate and political dynamics ahead of 2014 elections was a matter of concern.
Investors have already reacted to the new reforms and the stock market has moved up. Investors' concern about the current account deficit of 4 per cent of GDP (Gross Domestic Product) while Consumer Price Index (CPI) was above 9 per cent level.
Looking for a gradual improvement in the investment line because of the issues that the government has in controlling the fiscal deficit. The need to look at increasing private investment all over again as was done in 2003-2007 by lifting investment to GDP and cutting fiscal deficit.
There is definitely some hope that is building up with the policy action that we saw in September. In some ways, the market is indirectly putting pressure on them (the government) and that is why we are getting this policy action. The investors have also noted the Indian government's understanding of the need to take the investment line-up aggressively to prop up the economy despite political limitations.
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