Page 24 - Nuvama | IC Report 2023

• DE-GLOBALISATION • DEREGULATION • DEBT • DEMOGRAPHY • DEMOCRACY

Deregulation: India unbound

A favourable demography by itself is not enough to attract investments and drive growth. Africa too
is young, but its poor institutions, lingering policy uncertainty and lack of reforms make it difficult
to realise the continent’s full potential. India, on the other hand, is complementing its demographic
dividend with sustained efforts towards reforms, improving the business climate and reducing policy
uncertainty, so as to attract capital. After all, capital is a coward and frets uncertainty.
The global investment climate has deteriorated sharply—whether it’s energy shortages in Europe,
Economic Policy regulatory whip in China or labour scarcity in the US, policy uncertainty is ubiquitous and large.
Uncertainty Index India is one of the few countries that has shown a considerable uptick in political certainty and
bears out elevated investment climate. Economic reforms and deregulation, once political hot potatoes, now enjoy a
uncertainty globally,
whereas India political consensus.
ranks stable Moreover, these reforms are holistic in nature, spanning the domains of government, businesses
and households. A look at the economic policy uncertainty index (by Baker, Bloom and Davis) bears
this out. According to this index, global economic uncertainty remains very elevated, whereas India
ranks stable.

450
Exhibit 1:
India policy
environment more
certain than global
360

270
(x)
180

90

0
Sep ‘10 Sep ‘12 Sep ‘14 Sep ‘16 Sep ‘18 Sep ‘20 Sep ‘22
India economic policy uncertainty index Global economic policy uncertainty index

Source: Baker, Bloom and Davis economic policy uncertainty index, Bloomberg, Nuvama Research

More importantly, reforms are not just restricted to one sphere or lopsided towards a particular agent.
Rather, it’s all encompassing, benefitting all agents of society – corporate, households and government
– and uplift not just quantity of growth, but its quality as well.

22