• LIFe Thoughts

India's Outlook on 2019: An Ugly Duckling or a Beautiful Swan

India sits on the cusp of tremendous opportunity for economic progress and wellbeing of its citizens. The Indian democracy is unique: it represents a relatively broad-based pattern of growth and benefit sharing, in contrast to the global scenario of increasing inequality wherein the richest 1-10% of the population captures the majority of national incomes and wealth. India’s economy has structural strengths that have enabled robust growth and facilitated resilience to curb the vagaries of global economic fluctuations. PWC’s report, ‘The World in 2050,’ about the shift in global economic power projects that “India has the potential to become the second largest economy in the world by 2050 in PPP terms (third in MER terms), although this requires a sustained program of structural reform” (

India has seen a sharp increase in consumer spending driven by higher incomes, millions of diverse internet-users and a very young population. According to World Economic Forum’s ‘Future of Consumption in Fast-Growth Consumer Markets: India,” “growth in income will transform India from a bottom-of-the-pyramid economy to a truly middle-class led one, with consumer spending growing from $1.5 trillion today to nearly $6 trillion by 2030” and a “massive increase in internet penetration will lead to more than a billion internet users in India by 2030” ( Also in 2018, India saw a powerful revivification of female power. Indian women’s cricket team captain, Mithali Raj, became the first cricketer to score 2,000 runs in T20I; Dipa Karmakar became the first Indian to clinch a gold at a global event, and the nation introduced its first all-female SWAT team.

However, this past year – 2018 – brought some deterioration in India’s main microeconomic indicator. The current account-deficit and fiscal-deficit, as well as concerns about core inflation rates were ramped up and contributed to the fall of the rupee. Companies in India generally have higher quality of measures like Return on Equity and Earnings Growth, but 2018 brought poor returns of average stock-market generation, especially as the rupee weakened against the dollar. Indian stock market volatility in 2017 was approximately 6%, but skyrocketed to almost 22% in 2018, underlining greater uncertainty about future prospects for growth.

The New Year – 2019 – brings greater opportunities for the average Indian. Various reforms have made the country competitive on a global stage – from opening up to global businesses, doubling down on the services sector, and improving the business environment through lower tariffs and taxes, as well as deregulation of many sectors. Lower interest rates, coupled with declining inflation, have supported consumption growth and that momentum may continue well into 2019. In its World Economic Outlook Update, IMF estimated that the “Indian economy would grow by 7.8% in 2019”. Still the fastest growing major economy, India has seen strengthened domestic demand, as the benefits of structural reforms such as the Goods and Services Tax (GST) harmonization and bank recapitalization take effect.

Backed by a steady stream of investments, India’s PE landscape matured in the recent past. India witnessed prominent deals, making global and domestic corporates eager to capitalize on similar opportunities. The country is entering 2019 with strong tailwinds from an M&A point-of-view. Given optimal cooperation from factors like political elections, the global environment, assets expected to free up capital, and states’ fiscal condition, Indian deal volumes and values will be very high this year as well. As per the State of the Indian Ecosystem 2018 report, there are 39,000 startups currently operational in India and 2018 was an outlier year for the same. Given the plethora of opportunities that Indians are creating, along with the immense attention the nation is garnering, it is expected that the Indian startup ecosystem will part its way into another blockbuster year.

The Republic of India, once classified as a third-world country and associated with negative connotations, today continues on a path to becoming the world’s most dynamic nation: with consumption environments propelled by unique factors that leave projectors impressed, India holds the potential to surprise many more with its economic prowess.