This year’s Diwali is particularly prosperous
Jayna Rana, Investment Week, 2 November 2021
This week, millions of people both in India and around the world will celebrate the festival of lights, also known as Diwali.
It is an auspicious occasion that celebrates the plight of good over evil but is also used as a time to spruce up the home, buy new clothes and even start new business ventures. Money is gifted and friends and family are blessed with wealth and good fortune.
So why does this year’s Diwali, which takes place on 4 November, promise to be particularly prosperous? After suffering from one of the world’s deadliest waves of Covid-19 earlier this year, India has bounced back like no other country.
More than 400,000 deaths and 30 million infections were recorded, yet this time round, India’s economy remained, for the most part, open and no major corporate bankruptcies were reported. Furthermore, this year has seen certain sectors such as technology, grow at a faster pace than ever.
Investment bank Jefferies recently said India’s economic cycle suggests conditions are ripe for a repeat of its 2004-2010 style upturn in the coming years, with annual economic growth forecast to be between 8% to 9%.
Foundations are being laid for the start of a highly anticipated ‘super-cycle’ with the market trading well above its long-term averages and earnings growth starting to pick up. Meanwhile, concerns from earlier this year such as a higher level of bad loans following the deadly second Covid-19 wave appear to be reversing.
Focus on growth
From a political perspective, after years of reform, the government is finally prioritising growth. The Goods and Services Tax and Insolvency and Bankruptcy Code have now been around long enough to see their positive impact while the larger banknote demonetisation among other reforms has weeded out a good chunk of India’s black money and corruption.
Companies have passed through the country’s new and revolutionary system and many have come out the other side for the better. Meanwhile, banks have started lending again and are managing both their accounts and customers more efficiently. While some are still risk averse, their balance sheets have improved dramatically.
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