Amit Anand is the co-founder of INDF, Nifty India Financials ETF. INDF tracks the Nifty Financial Services 25/50 Index which reflects the performance of Indian banks, financial institutions, housing finance, insurance, and other financial services companies.
Last week we shared an extract of our recent interview with Amit where he discussed all-things Family Office including ESG, Impact Investing and Taxation.
Here Amit discusses how India is on-track to becoming the 2nd largest addressable economy for investors and why democracy is key to economic success.
India is the world’s 5th largest economy today and is predicted to be the 3rd largest by 2030. This means India is going to be the fastest-growing major economy in the world over the next decade and it has been quite fast-growing at about 7% a year in terms of GDP growth.
What is really exciting about India is that its growth is very sustainable, and it is primarily demographics driven.
A lot of people might not know this but over 50% of India’s population is under 29 years old and about 75% is under 40 so as opposed to a lot of developed economies where policy makers look forward to the next 20 years and worry about how they are going to pay their retirement bills of the majority of their populations, India is going to witness a huge increases in labour force.
In fact, I think India is the only major economy that will have an increase in its labour force which causes a huge increase in India’s productive capacity. It means that regardless of external factors or regardless of having to borrow money to grow, there is a natural source of growth and it is sustainable: demographics.
On top of this, India has really benefitted from a smartphone boom. This is thanks to a company called Reliance JIO which rolled out cost-efficient 5G network and what that has led to is India having the lowest-data cost in the world per GB basis. Smartphone penetration is increasingly rapidly which is leading infrastructure like literacy, finance, access to media and communications to be leapfrogged. We are seeing people access bank accounts and life insurance for the first time – the building blocks for a very successful growing country.
First and foremost India is a democracy and while it becomes the 3rd largest economy in 2030, it is really going to be the 2nd largest addressable economy for investors as India’s borders are relatively open in the sense of foreign companies being able to transact there. Some of the largest companies in India today are western companies like Google, Amazon, Facebook. India represents the second largest source of users for Facebook and the largest source of users for WhatsApp which is a Facebook app.
The Financial Services sector is the crown jewel of the Indian stock market and one of the reasons for that is it generally has better corporate governance which allows for strong shareholder returns. The reason we created INDF is because we thought the time had come for this particular sector; as its own asset class, to have a place in people’s portfolios where they can invest specifically in the area of the stock market that actually performs.
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