India's Real Growth Set to Outperform China, Nomura Says

How consequential is this and what are you looking at? Especially when Modi’s looking for that super majority, but he, the BJP, has that weakness down in the South, which is where the tech hubs are. It’s where manufacturing is. It’s where per capita incomes are higher than the north. How significant is the B? Is it for the BJP to get, you know, make ground in the South? And how important is this from an economic standpoint, right? So as you said, from a political standpoint, we are watching, you know, 18,000,000 new voters who have come in. Women voter participation actually was higher than male participation in 2019. There’s been a lot of focus on Women Voters in this election. So that’s something we think will continue. And as you said BJP, you know the northern part of India is BJP is stronghold South is not where we are expecting them to perform that well. But even Despite that, most polls have been pretty steady in predicting that BJP on its own will cross the halfway mark with more recent polls suggesting the coalition is going to get a two third majority. From an economic standpoint, if you know the manifesto that is out from the BJP does suggest policy continuity, So more focus on infrastructure spending, supply chain manufacturing, focus on macro financial stability. I think if the BJP does get a 2222 thirds majority then the question will be if they can focus on some of the factor market reforms like land and labor. It will become easier at the margin if they have a 2/3 majority. But I would say you know for some of these politically difficult reforms, its not just just about having the numbers, you have to bring states into the fold. So more coordination between center and state will still be necessary even if the BJP gets to the 2/3 mark and and India sort of positioned itself as sort of the the counter balance to China. So now I’m just wondering how much progress has been made on that front there? I mean, do you see India overtaking China as a lot, you know, the largest growth engine globally anytime soon in terms of the absolute growth rates? Yes. So over the next five years on average our prediction is India as real GDP growth will be 7% per annum given the increase we are seeing in the investment cycle, the reforms which are aimed at boosting productivity. And this contrast with our view on China where given the demographics as well as shifts in supply chain, our view is the long term steady state growth in China this decade is going to be shared under 4%. So within the region, yes, we do see India as a growth outperformer size wise of course it’s going to take a lot longer. The economic climate that India is trying to grow in is very different to when China joined the WTO. And politically, of course, the structure is very different in India compared to China. So I think both growth models have their own positives and negatives. In terms of the real growth, yes, India should be one of the fastest Asian economies this decade.