Page 24 - Nuvama | IC Report 2023
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•  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.



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