India now seen as new kind of locomotive taking China’s place: Swaminathan Aiyar

Economist and columnist Swaminathan Aiyar said that global investors have to some extent already factored in a Narendra Modi victory in the 2024 Lok Sabha elections.

India is a new locomotive that is taking the place of China, says Swaminathan Aiyar, Consulting Editor, ET Now. In an interview with the channel, economist and columnist Swaminathan Aiyar said that global investors have to some extent already factored in a Narendra Modi victory in the 2024 Lok Sabha elections.
Aiyar is of the view that Foreign Institutional Investors (FIIs) will pour in significant money into India in 2024.

“It has to be said that theFIIs have not been all that keen on India. It is not that money has poured into India the whole year but the global outlook as such appears to be not as bad as earlier thought,” Aiyar was quoted as saying.
Aiyar went on to say that the US economy seems to have achieved a smooth landing. Despite hiking interest rates, they (US) successfully curbed inflation without slipping into a recession, a relatively uncommon feat. “…but the US economy, having achieved a soft landing, is roaring ahead with unemployment as low as 3.9%. In those conditions, they (FIIs) will begin to have a more upbeat view on the whole world economy, where India is now seen as a new kind of locomotive taking the place of China,” Aiyar said. “Still not comparable to what China used to be, but I would certainly expect significant flows to be coming in 2024,” he said.

Indian equity benchmarks – BSE Sensex & Nifty50 – have soared after state election results in three major Northern and central India states – Rajasthan, Chhattisgarh, and Madhya Pradesh – saw the BJP win with a massive mandate. Most market analysts are of the view that the results strengthen the opinion that the Narendra Modi government will return to power at the Centre in 2024 Lok Sabha polls – something that will signal stability and continued reforms push.

While admitting that foreign investors like continuity, Swaminathan Aiyar also said that state election results don’t interest investors globally. “I would say that global investors are not particularly interested in the state elections. They look at the larger picture. I think they have already assumed that Mr Modi is going to win in 2024,” he said.

This article was originally published by The Times of India on December 4, 2023.

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