Thinkpad: Going For Growth
A growth pitch from the government. A credit pitch from digital lenders.
Happy Sunday.
The team over at the Finance Ministry came out all guns blazing this week when they spoke to Indian industry.
"Growth will be pushed both by the Reserve Bank and by us," said Finance Minister Nirmala Sitharaman. The government will take all steps to contain inflation, yes. But "growth is what is eventually going to remove poverty and bring a level playing field for all Indian citizens," she said.
Sitharaman prodded the industry to invest. Corporate taxes are at their lowest and the industry wasn't taxed to pay for the Covid crisis, she said. It is time for the industry to show "risk-taking abilities."
Alongside, Revenue Secretary Tarun Bajaj assured industry of stability and predictability in taxation. The secretary in the department of divestment, Tuhin Kanta Pandey, spoke of a Rs 6 lakh crore asset monetisation pipeline, which will include pipelines to road projects.
To Thinkpad, the message seemed to be a clear concentrated focus on growth.
But where will the growth come from? That was the topic of conversation with JPMorgan's Chief India Economist Sajjid Chinoy this week. Will it be consumption? Private investment? Or will public investment and exports need to do the heavy lifting? Chinoy believes it will be the latter. You can read or watch here.
As the pre-Covid theme of global secular stagnation gives way to strong growth for the next few years, there will be pure cyclical upside for exports. And if we decide to implement some of the steps recommended in the scores of reports dedicated to pushing up exports over the years, maybe we will stand to benefit from more than just the cyclical upside.
The second big push to growth will need to come from public investment, Chinoy believes. This is where asset monetisation will be essential. What we need is not just one year of high capital expenditure but a multi-year cycle. That can only be funded through successful and transparent asset monetisation. Here too, we suspect there would be at least a few dusty reports from years previous with suggestions on how to get it right.
Speeches are easy. Suggestions are dime-a-dozen. Can we actually do it?
Elsewhere, in the financial world, money is coming easy.
Indian fintech firms have raised $2 billion in the first half of the year. Digital lending. Digital insurance. Digital currencies. You want money? You got money. Some believe the widening tech crackdown in China will only push more money towards Indian consumer and financial tech businesses. On that topic, Raghav Bahl writes that "China may have annihilated its edtech and consumer internet companies to control domestic data and/or cull overweening entrepreneurs, but American savings became a massive collateral casualty."
Meanwhile, if you are wondering where all the money coming to Indian fintech is going, just go shopping. You can get credit for anything. Buy iPhone now, pay later. Buy expensive groceries now, pay later. And, in case you missed it, "marry now, pay later". Yes, you can read that tagline many ways. No, the company is not nudging you towards deep thought on marriage; they just want you to take credit.
Will buy now, pay later turn into buy now, pay never? Or will consumer and digital lenders live happily ever after?
Thinkpad would like to borrow from the trend and say—read now, think later.
Have a good weekend.