The directionality of important policies can help to determine a nation’s long-term economic outlook, as per Abrdn, and it believes that India’s economy is ticking several boxes on this front. 

“We think a handful of standout policy factors will be pivotal to India’s growth outlook. These include the policy of competitive federalism, progress towards a comprehensive new digital eco-system, and the push for more renewable energy sources,” writes Ken Akintewe, Head of Asian Sovereign Debt at Abrdn.

“While these are all domestic policy factors, external geopolitical trends are also looking increasingly favourable for India,” he adds. 

Additionally, Akintewe opines that India’s progress in areas like foreign investment liberalisation, bankruptcy laws, and the implementation of the Goods and Services Tax has improved its business environment and fostered growth. 

On competitive federalism, Akintewe said, “An important driver of India’s ongoing development journey, and one which perhaps does not receive much credit, is the policy of state empowerment.” 

Subsequently, the asset manager points to India’s digitalisation efforts, marked by the Aadhaar identity system, digital payments platforms like UPI, and the Digilocker system. Akintewe claims that these digital developments have transformed various sectors of India’s economy in a positive manner. 

Furthermore, Ray Sharma-Ong, Investment Director at Abrdn, contends that the country’s move towards renewable energy sources aligns with global sustainability goals and offers significant investment opportunities and economic growth potential.

Ong also touches on how India is benefiting from the escalating rivalry between the US and China. According to the asset manager, India’s strategic alignment with the US, its position as the world’s largest democracy, and its economic potential make it an attractive partner.

On investment implications, Ong said: “We think the directionality of key economic reforms, coupled with geopolitical trends, are highly supportive of India’s long-term growth and investment outlook.”

The asset manager goes on to highlight how in the equity space, renewable energy projects and digital infrastructure are driving growth, while the “Make in India” initiative aims to boost domestic manufacturing and economic self-sufficiency. 

On the bond side, Ong believes that India’s strengthening economy and improved credit fundamentals have increased investor confidence, with growing accessibility to the bond market.

Read the full insight here.