KKR report lauds Modi regime for initiatives to propel India's economic growth

In recent years, Prime Minister Narendra Modi has done an excellent job in addressing issues that were "slowing India from reaching its full potential", said Henry H McVey, head of global macro and asset allocation at CIO KKR Balance Sheet, in a February 2024 report, Thoughts from the road.

KKR and Co is a global investment firm. These issues were highlighted in KKR's previous report on India that was published in 2012 - India: Unlocking the Demographic Dividend. At that time, McVey had said that India was "bursting with macroeconomic potential" but would not be able to reach its full potential unless it invested in infrastructure, tackled the problem of inflation and cut subsidies to help balance the fiscal situation to improve consumption.

Over the decade, according to McVey, the government has made efforts in tackling these challenges. One of these measures was the introduction of the Goods and Services Tax (GST). "Besides raising tax revenue, this initiative is also hugely important for reducing barriers to cross-regional trade in India and increasing productivity," the report said.

The second initiative was championing of major digital rollouts such as "Aadhar for digital ID and United Payment Interface or UPI as well as encouraging growth in e-commerce networks like the ONDC," McVey said.

The third measure has been encouraging "deeper and broader investment" in infrastructure. While there is still a lot to be done, he says that one needs to look at it from the fact that only 81,000 kilometres of national highways were built over 65 years, from 1950 to 2015, while 79,000 kilometres have been built in just the last 10 years. A similar trend was also noted for other infra projects like rail, ports, renewable energy, and power transmission.

Overall, the report said that while with its skilled population of 1.4 billion, the Indian story is still a consumption-driven one based on rising per-capita GDP. "These upper-tier segments of the consumer market are booming, and we see exponential – not linear – growth ahead," he he said.

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