India a Safe Bet for Investments

India is one of the top investment destinations in the world right now thanks to a stable economy and low inflation besides reforms like the goods and services tax and new insolvency rules, said Chicago-based business management consultant Ernst & Young chairman Mark Weinberger.

Demonetization, which was initially seen acting as a brake on growth, will help rein in corruption and encourage the shift to a cashless economy, he added, PTI reported.

“It’s got a 7% growth rate, stable government, good macroeconomic indicators like low inflation and deficits under control, plus it’s got massive reforms aimed at the right direction,” he said.

“In other emerging markets, you have swings in commodity prices, you have Venezuela and Brazil running through difficulties, Brexit will have its own effect. There are difficult decisions to be made in the world but when you look at where to put money, India constantly comes out as one of the safe bets.”

Prime Minister Narendra Modi’s policy change agenda is responsible for altering the global view on the country’s prospects.

“There is no doubt that Modi is changing the attitude of India towards opening the economy to the rest of the world,” Weinberger said. “His government is trying to put in place reforms that will broadly improve the Indian economy and that means from infrastructure investment to reaching out to rural population to create more wealth to things like putting in a GST tax structure, which is monumental.

“Then, things like the bankruptcy law to deal with non-performing assets—a whole bunch of things that hadn’t been done for years.” To be sure, India still ranks high on the list of places that are difficult to do business in, he said.

“But the reforms have just taken place and it takes years for them to be actually executed well,” the EY chairman said. Demonetization “was a bold and courageous move to deal with corruption,” he said.

Meanwhile, India’s trade deficit narrowed in June after swelling to a 30-month high in May even as exports grew slowly in the month.

Exports grew 4.39%, a four-month low in the 10-months of continuous growth, to $23.5 billion. Imports rose 19% to $36.5 billion leaving a trade gap of $12.9 billion in June. Trade deficit was $8.1 billion in the year ago period and $13.84 billion in May.