India’s Greatest Asset, According to Aberdeen AMC

What do you think is India's greatest asset? Its rising forex reserves? No. Maybe its booming stock market? No. How about its diverse geography? Close, but no. Its politicians? Not really.

According to Aberdeen AMC, the country's greatest asset is its growing population, which will soon overtake that of China. In its report titled “India: The Giant Awakens”, the investment management group says the key to India's GDP growth lies in its demographics.

Indians are young with over 65 percent of the population under 35. The majority are highly educated and fluent in English. India's workforce will be the world's largest within the next 15 years. Over 70 percent of the population live in rural areas with massive potential for urbanisation. Indians are diligent savers and generally eschew debt. The potential demand for a variety of goods and services from a large and expanding middle class is huge.

The U.S. government forecasts that India will be the third-largest economy by 2030, behind the U.S. and China but ahead of Japan, the Aberdeen report says.

Reclaiming Past Glory

While India's rise may seem unprecedented to some, for Aberdeen, it's a matter of actually reclaiming a position the country held for centuries.

Rewriting the Rules of the Game

Narendra Modi has “torn up the rulebook and started afresh,” Aberdeen says in its report.

“Our trip to India reinforced our view that the seeds of significant structural changes have been sown,” Kenneth Akintewe, senior investment manager, fixed income, Aberdeen Asia, writes.

While Aberdeen acknowledges that there is still a lot of work to be done, it says government initiatives such as ‘Make in India' have been showing results, citing the 24 percent rise in foreign direct investment in 2015 over the previous year.

It says other reforms like the Goods and Services Tax Bill, speedier environmental clearances, and the smart cities project will bode well for the country.