The main event during the quarter was the election and the unexpected outsized win of prime minister Modi. The new budget was presented and a continuation of promises made in his first 5-year chapter may be continued. In a land with almost 1.3 billion people, a promise made when elected the first time was electricity and toilets for villages.

This is expected to be achieved before this year is over. A further expansion on the agenda is tap water availability.  After that, to offer a low-cost housing alternative.  Potentially 19 million low-cost houses may be constructed by 2022.

Another point to reflect on for the six largest global economies is the GDP growth since just after WW II as it took India 55 years to USD 1 trillion GDP, then it only took 5 years more to reach the 2nd trillion, now at almost USD 3 trillion and a target of USD 5 trillion in six more years!

On the economic front, we saw results from the June meeting by the monetary policy committee resulting in a rate cut by the central bank of 0.25% (5.75% is now the new interest rate level).  This is the third rate cut in just four months and changed its stance from “neutral” to “accommodative”. Since consumer price inflation is well under 4%, the market expects further rate cuts.  We saw a slight sell-off in the last part of the quarter due to the late arrival of the hugely important monsoon and further downgrades in the shadow banking sector.

Source: ICF, Bloomberg LP