By Shaili Chopra

With every New Year, there is hope. And with the Indian economy showing some signs of repair, there is confidence that 2016 will carry outcomes for growth, jobs, infrastructure and consumption. Manisha Girotra of Moelis is a banker with her ear to the ground, and this morning, our exchange covers multiple fronts that could be the economy’s fix going forward.

Positives for India Inc

“With continued softening of commodities prices, a downward interest rate cycle, government spending-led investment cycle, deleveraging of balance-sheets by sale of assets, India Inc gets an improved environment to operate,” she emphasizes. This October, industrial production grew 9.8% on an annual basis, riding on the back of a robust growth in consumer products and capital goods during the festive season.

Implementation of further reforms and the Goods and Services Tax should also back any further progress. However, even as such measures play out, what would need to rise in parallel is both investment and consumption in the infrastructure sector that’s been languishing with few companies kick-starting dormant projects and with the absence of big greenfield investments. “This will result in job creation. And growth with job creation is critical in our young, populous country,” Girotra stresses. She is concerned that the government may have to take the lead in investment as private sector initiatives there continue to be sluggish. Additionally, export growth has been patchy.


2016, hopefully, will bring a better monsoon. She says, “With two poor monsoon rains, here’s hoping for a good third. India has never had three bad monsoons and that should help pick up rural incomes.”

Foreign Investment

Government’s been pressing on the matter of stake sales in public enterprises. Additionally, opening up foreign investment in some sectors has been a game-changing announcement. For 2016, expectations are high that someone of these works will deliver results and funds. “Foreign investment in defense, railways, infrastructure sectors and sale of assets will help deliver balance sheets.”

Sector Growth

Girotra is hot on tech, pharma and auto going into 2016. It’s driven by consolidation growth mostly she points out. Consolidation and capital will now flow to the larger players. Smaller players will have to consolidate as they face existential issues. “Domestic pharmaceutical companies will buy global platforms for market access. Consolidation in tech sector will be led by financial sponsors.”

New Enterpreneurs

Girotra is bullish about India’s start-up ecosystem and the growth seen in digitalisation of services. 2016 may be an important year for some sectors online. “Retail and commercial banking will be completely transformed with digitisation.” Not only will these businesses alter their style of operation, but banking and retail may also force other businesses to rethink their approach. “Old and new will co-exist though digitisation will force us all to think of our businesses very differently.” Girotra is particularly curious how “the shared economy businesses will leap frog” and change a lot about consumption patterns in our country.

The size of the Indian economy will more than double to $5 trillion if 7% growth rate is sustained for next 10 years, said the Minister of State for Finance Jayant Sinha at the Ficci AGM last week. On fiscal deficit, he said the government would meet the target for current as well as for the next fiscal. The good news is that India is finding its own economic spot, away from the shadow of China. With a more stable growth rate, fewer bubbles, and a vibrant domestic entrepreneurial boom, India is finding more than just export stories to build its economic mettle. And it’s this environment and prospect of sustained rapid growth that probably urged Federal Reserve’s vice chairman Stanley Fischer to say India has “enormous potential” to recharge Asia’s growth engine. Could 2016 be the cusp of that makeover?