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Interview

Published on: Jan. 27, 2021, 9:04 p.m.
India has been rerated, globally
  • Chauhan: I have great faith in our youth, their tech prowess and forward-looking mindset; Photo: Sanjay Borade

By Daksesh Parikh. Executive Editor, Business India

Sensex @ 50000 is a historic event. What do you have to say?

This has been a journey since 1979, the year in which the Sensex had been benchmarked. 50000 in 42 years is indeed a great achievement. Rs1 invested in 1979 would in 42 years have gone up to Rs70,000 if one takes into account dividends and other income on investments. Returns of 700x. No other asset class, be it gold or property, would have yielded such returns. Markets test investors’ patience. If one remains invested in strong companies for a longer period of time, this will yield similar returns, probably in a much shorter period. 

Do you feel there is a need to widen the investor base, given that there are only five crore investor accounts with the depositories?

This is a fallacious argument. Demat accounts are only a proxy for looking at the investor base. One has to see the investors in EPF/PFRDA/PF who are indirectly investing in markets. A huge number of investors in MF do not have depository accounts. In the BSE there are more than six crore accounts. If one account holder has a family of four to five persons, the total population supported by investors is more than 30 crore. In the case of the BSE itself, over the last one year we added more than 1.25 crore accounts. These were largely from young people. A six-crore investor population is more than the population of several countries and we may be amongst the top 15/20 countries in the world in terms of our investor population. The only requirement for becoming an investor is a PAN card. The majority of Indian do not have a PAN card and are thus prevented from investing.

Has the rerating of India been responsible for the growth in the Sensex?

Definitely. India has handled the Covid situation very well and due credit must be given to Narendra Modi for his leadership in handling such a crisis. We have a much larger population than the US and EU but our infection rates and death rates per million, during Covid, are much lower than several developed countries. We are known to be the vaccine capital of the world. Pfizer’s vaccine is priced at $70/80 while Indian vaccines are priced at less than $3. We have definitely been rerated in the last 10-12 months. Foreigners are looking at India in a different way. This is one of the reasons why FPIs have invested heavily in the country. We Indians have to be less critical of ourselves. We are disciplined and responsible, as a society, and this is one of the reasons foreigners have chosen to invest in India.

  • Returns of 700x. No other asset class, be it gold or property, would have yielded such returns

Do you feel we will soon become the IT/technology capital of the world?

I would say we are already the IT/technology capital of the world. The pace of automation has gone up considerably even during the pandemic with the government also embracing it in a big way. Even during the pandemic, the back offices of global companies have been working 24x7. We have one of the largest number of start-ups in the world. Possibly the largest after the US and China. We have created a very large ecosystem across sectors, be it in agriculture or science. Recently, the government gave an order to the IIT-backed start-up making drones. The BSE itself has two start-up hubs at Mumbai and Varanasi. The government move to allow CSR money to be invested in start-ups has provided a good impetus to them. We now have quite a few start-ups from other countries coming to India to secure funding for their new ideas and ventures. 

What future growth for India do you envisage?

No growth path can be linear. Be it markets or the economy. However, I have great faith in our youth, their tech prowess and forward-looking mindset. We are an innovative country and do not follow a top down approach. The youth of today do not wait for the government to tell them what to do, what to pursue. I firmly believe innovation will explode over the next decade or two. Given the innovation and enthusiasm of the youth, India will be much better than what it was.

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