India is becoming the focus of global: the economy continues to grow at a high speed, the stock market has a new high, and futures and options trading volume has ranked first in the world for 4 consecutive years. In 2030, it is expected to become the third largest consumer market in the world.Essence

The momentum of the high -speed growth of India's GDP is the dividend of population, and the other is the development of manufacturing and infrastructure.In 2014, India's national strategy that announced the "manufacturing of India" has set up three goals: increase the annual growth rate of manufacturing to 12-14%; by 2022, 100 million manufacturing employment positions will be increased; by 2025, the manufacturing industry will occupyThe proportion of GDP rose to 25%.Driven by policy, the contribution rate of manufacturing to India's GDP is about 20%.However, if the quality of labor cannot be improved, the road of development in India will encounter obstacles.

Source: New Fortune Magazine (ID: XCFPLUS)

Author: Dai Lu (Senior Researcher of Guotai Junan Institute) Wang Xiao (Assistant Director of Guotai Junan Futures Research Institute)

01. The diversified development behind India's high -speed growth

In recent years, the continuous high -speed economic growth has gradually made India the focus of global investors' attention.According to the World Bank's data, India's name GDP in 2022 reached 3.4 trillion US dollars, ranking fifth in the world, only behind the United States, India, Japan, and Germany.According to data from the Economic Cooperation and Development Organization (OECD), after the public health incident brought by the epidemic, India's GDP growth rate in 2022 reached 7.24%.OECD expects that the growth rate of India's GDP in 2023 will be between 6%-7%and is expected to continue to lead the top four economies in the world.

The Indian economy has the characteristics of diversification: the value -added of the service industry continues to occupy nearly half of GDP, showing its dominant position; although the proportion of agriculture and manufacturing has fluctuated, it is still an important part of the economy, especially for providing employment.And increase exports (Figure 1).In the second quarter of 2023, benefiting from the strong recovery of the service industry, India's actual GDP growth rate rose to 7.8%.However, affected by the huge population base, its per capita GDP was only $ 2,389 in 2022.

Since the Modi government came to power in 2014, India has developed rapidly. Except for 2019 and 2020, India's actual GDP growth rate is 6%-9%per year.From the perspective of promoting economic development, the Modi government has also been recognized by the people.According to the previous Indian elections and the latest polls, Modi is expected to be re -elected in the 2024 election.When Modi was elected Prime Minister in 2014, the support rate of the Indian People's Party (BJP) was only 31%. When re -election in 2019, the support rate of its party faction increased to 37.3%, leading the second place 7 percentage points, rising, rising, and climbing rising.obvious.The latest poll results show that the alliance led by Modi is expected to win 315 sub -house seats, far a second place in 172 seats, and is expected to be re -elected.If Modi is successfully re -elected, a series of measures may be further promulgated, including but not limited to further liberalization of foreign investment, increasing government capital expenditure, and promoting infrastructure construction.

Modi emphasized that India is expected to become the "third largest economy in the world" and repeatedly mentioned the "$ 5 trillion economy" plan in its second term.The plan was promulgated by the Modi government in 2014, with the goal of reaching India's GDP to $ 5 trillion from 2024-2025.The Modi government has launched a series of reforms in the economic field.First of all, in terms of foreign direct investment (FDI), it has attracted a large amount of foreign capital investment with an open attitude and relevant domestic reform measures.India's foreign direct investment inflows were about $ 34 billion in 2014, reaching approximately $ 48 billion in 2022.Secondly, through the implementation of the national wealth plan, the government successfully included more than 500 million Indians into the formal banking system, with a cumulative deposit of more than US $ 240 billion, injecting new vitality into economic growth.Third, the waste banknote order issued by the Modi government has decreased by about 75%of cash circulation. By accelerating the application of online payment, India's cash circulation has increased significantly, laying the foundation for the digital transformation of the economy.Fourth, infrastructure construction is enhanced by promoting the National Infrastic Pipeline (NIP) and the National Infrastructure Program.

02. Population dividends: The intersection of the advantages of labor and the challenge of reality

As a large population country, India's current population structure is very similar to India in 2000, and has a very strong advantage of population dividends (Figure 2).

India's 15-59-year-old population accounts for about 64%of the total population, and the young labor force is sufficient.From the perspective of age structure, India has the world's largest young population group. According to UN data, in 2021, India has a total of 250 million people aged 15-24, accounting for 18%of the total population, 590 million people 15-40 years old.42%.The proportion of labor ages for 15-64 years increased from 55%in 1965 to 67.5%in 2021, an increase of nearly 12.5%.In addition, India's population structure presents a pyramid model, which means that the ten-year period of 2025-2035, the labor advantage is expected to be further released.According to the forecast of the United Nations, India's population will continue to grow and break through the 1.6 billion mark in 2039.

Although India has a huge demographic dividend, it still faces problems such as high illness rates, low women's labor participation rates, regional and racial discrimination.If systematic reforms cannot be carried out, the road of economic development in India will suffer serious obstacles.

03. National strategic leading manufacturing and infrastructure development

Indian private consumption accounts for about 60%of GDP, making significant contributions to GDP growth.The core driver of Indian consumption is its huge population and relatively young population structure.Population data reflects the elasticity of Indian demand and is also the pillar of economic growth. We believe that Indian consumers' demand for goods and services will remain strong in the next decade or even the next decades.

With the growth of the economy, India's per capita income has also maintained a high -speed growth. In 2021, it exceeded the $ 2,000 mark per capita.After reaching this level, India and many other countries have increased significantly.Therefore, we expect India to have a strong strong consumption growth in the next decade.In addition to being affected by public health incidents in 2020, in the past ten years, India ’s consumption growth has led the top five economies in the world and is expected to become the third largest consumer market in the world in 2030.

The contribution rate of Indian manufacturing to its GDP is about 20%.In the policy surface, the Indian government puts the development of the manufacturing industry in the center of gravity. The main foundation of the policy is the national strategy of "Make in India" announced in 2014.The strategy has established three established goals. One is to increase the growth rate of the manufacturing to 12-14%per year; the other is that by 2022, India will add 100 million manufacturing employment positions; the third is that by 2025, India is India.The proportion of manufacturing will rise to 25%of GDP.In recent years, the government has successively introduced a number of policies, which has assisted the achievement of the goals of the series in multi -dimensional assistance.

The direction of the development of Indian manufacturing is roughly similar to India. It focuses on domestic alternatives, attracting foreign investment, and encouraging technological innovation and digital transformation.Relevant policies can be roughly divided into two categories. One is led by the Indian Industry and Internal Trade Promotion Department to open investment in many industries to foreign capital, and to a certain extent improves business convenience and accelerate foreign investment; the second is to formulate strategiesIn the focus of manufacturing development, direct fiscal means (such as tax subsidies, output incentive policies, and labor training) promote localized production, mainly including 15 areas including electronic manufacturing, automobiles and components and new energy.

Developing infrastructure is the only way for a superpowers like India.India's economic growth goal of $ 5 trillion in 2025 needs to strengthen infrastructure.In the budget of the fiscal year 2023-2024, the Modi government has expanded government capital expenditure for the third consecutive fiscal year in fiscal year, which is 33%higher than the previous fiscal year, reaching the level of $ 122 billion, about 3.3%of India's GDP in the same period. These governmentsMost of capital expenditure flows to the fields of railways, highways, power, communications, public welfare housing.

Under the strong investment, India's infrastructure industry has developed rapidly in the past three years.Taking the transportation and power generation industries as an example, in terms of roads, the total mileage of the Indian national highway has increased from 91.29 million kilometers in 2014 to 145.24 million kilometers in 2014, an increase of 59%.In terms of railways, the scale of the Indian railway ranks fourth in the world. In fiscal year in 2022-2023, India laid 5,243 kilometers, and the average daily railway laid mileage broke the history, reaching 14.4 kilometers.The capital expenditure of the annual railway from 2023-2024 was 2.6 billion rupees (US $ 31.61 billion), reaching a record high, which was about 14 times the expenditure of 2012-2013.In terms of aviation, 74 new airports and 473 new routes were put into operation. The number of airports and airports in all -printeds increased from 74 in 2014 to 148 in 2022. The scale of the Indian civil aviation industry ranked third in the world.In terms of power that has been criticized, India has also made great progress. As of February 2023, the total power generation installed capacity was 412.21 gigresses.(Including large hydropower), accounting for about 42.5%of the national total installed capacity.

04. Government expenditure has risen sharply, and monetary policy has remained stable

In general, the Indian government has expressed a stable and prudent attitude in both financial and monetary policy. The goal is to promote economic growth while ensuring the stability and sustainability of the macroeconomic economy.

In terms of fiscal policy, in the federal budget from 2023-2024, the total market borrowing amount reached approximately $ 185.4 billion through a time limit securities, an increase of about 8.6%compared with the US $ 170.7 billion in 2022-2023, of which the net market borrowing (including short-term short-term (short-term short-term short-term short-termTreasury coupon) is expected to be about $ 147.8 billion, accounting for 68.9%of the total financial deficit between 2023 and 2024.The fiscal deficit in the budget of 2023-2024 was 5.9%of GDP, a decrease of 53 basis points from 2022-2023.In the budget, the Indian Federal Government stated that capital expenditure is required to accelerate economic growth, and at the same time, it still said that it will still maintain financial prudential to strengthen the macroeconomic stability.Although the Indian government reiterated its commitment that by 2025-2026, the total fiscal deficit is reduced to less than 4.5%of GDP, but it still seems difficult to achieve.Especially considering the government's borrowing plan in the next year, India's future debt scale may continue to increase.However, if the economy can maintain stable growth, the impact of the increase in debt scale may be relatively relieved.

In terms of monetary policy, the primary goal of Indian Reserve Bank is the stable price, which uses flexible inflation targets and uses this as a framework of monetary policy.The Indian Reserve Bank's goal of the overall inflation rate is 4%, the tolerance range is about 2%-6%, and the impact of monetary policy on economic growth.The Central Bank of India is also fine -tuning monetary policy operation procedures in order to effectively transmit policies to the financial market and even the real economy.Compared with Europe and the United States, India's inflation pressure in this round of inflation is less. Therefore, the Indian central bank tighten the strength and pace of monetary policy than the Federal Reserve.In May 2022, the Central Bank of India began to raise interest rates. By February 2023, a total of 6 hikes raised the repurchase interest rate from 4%to 6.5%, and the cumulative increase of 250 basis points.The level is basically the same as the epidemic.

05. Stock market: Lian innovative high, derivatives trading volume is at the forefront of the world

There are 23 stock exchanges in India, of which the two major national transactions are well -known at home and abroad, that is, the Mumbai Stock Exchange and the Indian State Stock Exchange (NSE). As of September 2023, the market value of the two exchanges is3.8 trillion US dollars and 3.6 trillion US dollars, the top five industries in the market value include finance, consumer goods, raw materials, industry and information technology.This is in line with the strong development of India in the fields of information technology, pharmaceuticals, consumption and financial services.In addition, as the listing costs of the State Exchange are usually higher than the Mumbai Exchange, many small and medium -sized enterprises and startups are more inclined to go public in Mumbai.

In 2023, the Indian stock market attracted the attention of a large number of foreign institutional investors, making NSE NIFTY 50 and BSE Sensex a record high.NSE NIFTY 50 is the index of pricing in the Indian rupee. In 2023, it rose about 20%. Even if the index was converted to US dollar pricing, the annual increase of the exchange rate was still the main index of the global market.The market value of the Indian stock market increased by about 20 times compared to 20 years ago.

Derivatives trading is an important part of the Indian stock market.After the launch of index futures in 2000, in 2001, derivatives such as index options, stock options, and stock futures were launched.In 2022, according to the statistics of the Indian National Stock Exchange, the total transaction volume of Indian market futures and options has ranked first in the world for 4 consecutive years, and the transaction volume is more than 400 times the spot.

There are two reasons for the performance of the Indian stock market. One is that the profitability of corporate profits is strong in the background of the high -speed growth of India. Regardless of the NSE NIFTY 50 or BSE Sensex, the yield and profit margin of ingredients companies have significantly high.At the level before the epidemic and in a continuous expansion.The second is to attach importance to the construction of the system. Since the establishment of the Securities and Exchange Commission (SEBI) in 1991, the Indian capital market has implemented a number of important reforms, including allowing the establishment of private equity funds, the opening of foreign capital, and the access of international capital markets and banks.In order to enhance the openness of the market; at the same time, attach importance to the company's financial and compliance problems, the Indian capital market has a relatively high delisting rate and a high success rate of delisting.All companies are required to repurchase shares.

06. Commodity: The influence of demand is rising, and consumption and infrastructure become the core narrative

India occupies an important position in a number of commodity consumption, but it is relatively low in industrial commodity consumption.

In terms of energy, India is the third largest crude oil and coal consumer (second only to China and the United States). The growth rate has been stable since 2018. At present5-5.5%, coal consumption accounted for 12-13%); although India is a traditional consumer country, the overall consumption demand does not have strong momentum support, and the global proportion has a serious contraction. In agricultural products, India is due to its it.The factors of their own population have a large consumption, but the trend has continued to weaken since 2015.In recent years, the rapid growth of Indian consumption is energy, non -ferrous metal and black metal sectors.

The Indian market's consumption of major commodities is at the beginning of the initiative. The future growth imagination points are per capita consumption.Due to the low current demand base in India, even if it assumes that its fixed asset investment growth is close to India, the increase in consumption of commodities is far behind India.At the same time, the domestic commodity production and consumption of commodities in India relied on imports, especially energy, which led to India's macroeconomic is susceptible to fluctuations in commodity price fluctuations.However, India's marginal impact on the commodity market has risen significantly. On the one hand, some key products such as energy, black metal and non -ferrous metals have risen, and on the other hand, the current major commodities are in the state of tight supply and demand, India's incremental increase in the incremental increase in India.Demand shows a more significant impact.India's rising dependence on imports makes it an important variable in the market in the future.

In the future, India's demand for goods depends on the development of the three sectors of infrastructure, manufacturing, and consumption.At present, the manufacturing industry is at the end of the recovery cycle and is dragged down by external factors, such as the Russian and Ukraine War and the interest rate hikes in Europe and the United States. The production capacity has not yet fully recovered, but under the stimulus of strong policy, the future can be expected;The support of residents' income increase is expected to enter the stage of prosperity; infrastructure has received continuous attention and investment in the Indian government, which has become the main clue of commodity narrative.However, unlike India, India's infrastructure has problems such as policy persistence, low infrastructure benefits, and testing of fundsMumbai Stock Exchange. At the same time, when analyzing and predicting the influence of Indian infrastructure on the demand for commodities, there is also relatively lagging progress, infrastructure infrastructureData disappointment and other issues.Therefore, we must see both opportunities, but also carefully evaluate whether the current demand scale of India will be the main reason why the price trend reversal of commodities will drive the price of commodities in the future.

Any information and information mentioned in this article only expresses the author's personal point of view or the statement of specific events does not constitute recommendations and investment suggestions, and does not represent the position of our society.Investors should bear the risks and consequences generated by investment.