Goldman Sachs India Securities said India has already attracted $13 billion net foreign funds so far this year and expects the trend to continue.
“India has already attracted net capital inflows of about $13 billion so far this year which contrasts with net outflows of $11 billion last year and I expect that trend to continue,” the US broking firm’s Chief India Economist Prachi Mishra said in the latest episode of the firm’s Exchanges at Goldman Sachs podcast.
She said foreign investors’ appetite for Indian assets has swelled this year, buoyed by Prime Minister Narendra Modi’s decisive general election victory in May.
Given the government’s strong majority in Parliament, asset managers are anticipating sweeping structural reforms in areas like land use and labour to boost growth, Mishra added.
While the Central Bank of India recently cut interest rates to stimulate the economy, the country’s longer-term growth is underpinned by changing demographics.
According to Mishra, the average GDP growth in India over this decade has been about 7 per cent a year, and three-quarters of that is attributable to consumption.
“India has a large and growing middle class with increasing aspirations and this middle class wants to consume and save less,” said Mishra.