India – A 4 Trillion Economy or A Fleeting Euphoria?

November 19, 2023, 2:00 PM- The day when every Indian was glued to their screens to watch the Cricket World Cup Final. #India #CWC #KingKohli were a few hashtags that were trending on every social media platform. And why not? The Indian team had only brought glimmer and spark to their eyes after their unbreakable ODI win streak. While every Indian was planning the munching menu, a screenshot started doing the rounds. And suddenly, tho for a fleeting moment, the Blue Jersey hashtags got replaced with this green screenshot. 

Source: There is not any, that’s the point.

For those who were deeply engrossed in the match, do not worry, let me explain to you what this chart means and why is everyone jumping on this. As you can see, the photo above shows the live GDP of countries. All of this is fine but there is something interesting here. It indicates India’s GDP crossed $4 trillion. Many lauded the development and congratulated the ruling government for achieving the unbelievable milestone. Good and proud moment, right? Until it wasn’t. It turned out to be false. 

Time for Fact Check!

The only indication of our economy reaching the $4 trillion mark is this one image, an image that came out of nowhere but went on to rejoice some Indians while many questioned its accuracy. I was the latter and thus I went to see whether it is actually true. And here’s a boomer: India is not a $4 trillion economy yet. I do not question the fact that India is expected to become the world’s third-largest economy by 2027. But it is still 4 years down the lane.  There has been no official statement from the Finance Ministry and the National Statistic Officer. Even the IMF has made it clear that they do not collate real-time GDP Data. 

Here is a fact. The Union Government’s National Statistic Office is the only official source of data. GDP numbers for Quarter 2 (July- Sept) will be released in November 2023 and estimates will be released in January month of next year before the Interim Budget. 

Let me remind you, this was just an estimate and one thing you should remember about estimates is that they keep fluctuating based on numerous factors.

Dive into data: The table below depicts rankings and GDP numbers for the world’s nine largest economies. As you can see, we are currently at $3.3 trillion. The data shows nominal GDP Values, 2022.

Source: Worldometers.info

We definitely are on the way to becoming a $4 trillion economy soon. However, that day is yet to come and when it’s here, we’ll have much more evidence than just a rumored screenshot. We cannot comment on the timeline but we definitely can show you the numbers that will restore your faith in India’s ability to become the third-largest economy, sooner than ever. 

The saddest part about this screenshot is GDP per Capita income. But we firmly believe in India’s growth story. In a country like India which has the world’s highest population and has consumers for everything and anything, the consumer is the king. Consumers like you and me are what is going to drive this growth. Here, I can definitely give you facts. Let’s have a look at a few sectors. 

Disclaimer: The information on the sectors is going to be stats-heavy. 

India’s Telecom Transformation: The 5G Impact

The advent of 5G is set to act as a catalyst for widespread cloud, AI, and edge computing use cases and boost India’s GDP by $450 billion between 2025 and 2040.  Over the past five years, data from the DoT showed that the number of towers in the country has increased by 60%. Additionally, the DIPA estimates that over 12 lakh towers need to be deployed in India over 2023-24. The telecom business already employs almost 4 million people, with India being the world’s second-largest telecom market with over 1.2 billion users. 

Source: Livemint

India’s $200 Billion Pharma Vision

The pharma sector’s contribution to manufacturing is set to double by 2030, accounting for a 20% share. This will boost India’s GDP significantly. The PLI scheme and the large Indian market have attracted global players like GE Healthcare to scale up manufacturing in India. Under the PLI for medical devices, 26 projects with an investment of ₹1,206 crore have been approved. Domestic production of devices like MRI, CT scans, etc. has started. India is expected to have more manufacturing capacity to cater to global demand and reduce import dependence.

Source: Navadhi Market Research

India’s Infrastructure Leap: The Metals and Mining Opportunity

The surge in infrastructure development directly translates to increased demand for metals and minerals, driving growth of the metal and mining sector in India. As a result, steel consumption is expected to reach 230 million tonnes by 2030 from 119 million currently. Aluminum consumption in India will more than triple from 2.6 million tonnes in 2021 to an impressive 9.5 million tonnes by 2030.

From commodity chemicals to infrastructure, I can talk about all the sectors that are witnessing stupendous growth but I don’t to throw all that data-heavy information toward you. Hence, to make things easy for you to understand and clear your doubts, we, in collaboration with Smallcase, are organizing an Ask Me Anything session this Sunday, November 23, at 11:30 AM. Our fund manager, Divam Sharma, will be answering all your questions. We will be talking about the Latest Trends and Hidden Gems in Small Caps Space. 

Smallcaps have significantly outperformed largecaps in recent periods, with the BSE Smallcap index gaining 16% in the last 6 months compared to 6% for largecaps. Over 1 year, small caps have returned 12% vs 9% for large caps. This strong performance has pushed smallcap valuations to a premium, with the index trading at a one-year forward P/E of 16.1x compared to 17.5x for the Nifty50. However, the recent 12-16% correction in small-caps has made valuations relatively attractive, with the premium narrowing as the valuation gap versus historical averages closes further. 

Divam will talk more about the smallcap space this Sunday. Tune in for the live here:  Uncovering Latest Trends and Hidden Gems in Small Caps Space with Divam Sharma

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Green Portfolio is a SEBI Registered (SEBI Registration No. INH100008513) Research Analyst Firm. The research and reports express our opinions which we have based upon generally available public information, field research, inferences and deductions through are due diligence and analytical process. To the best our ability and belief, all information contained here is accurate and reliable, and has been obtained from public sources we believe to be accurate and reliable. We make no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results obtained from its use.