Anish Tavakli, co-authored capital of ICICI PRUDENTIAL MIENUAL FUND, for which US tariffs for Indian industry and markets need to grow their impact on pharmacist and domestic demand. The session was conducted by Sandeep Singh, Resident Editor, Mumbai
Today, the United States has a very strong economic result, but is constrained by the number of employees. US unemployment is multifaceted. If you set tariffs, the output will not increase, it is the first. Second, if you want to import less and cannot increase home products, you need to run less. Your standard of living must come down.
Finally, capital and current accounts are both sides of the same coin. The inflows of capital or result in current account leaks, or you need to raise stocks. The United States does not keep reserves because the dollar itself is the reservation currency. If you want to involve investments, we want to inflict the capital at the expense of the capital, then you describe that we appreciate the current account deficit.
And if you want to reserve a currency that is again the US goal means that you want to attract foreign capital. After all, the laws of economics cannot be banned.
On the impact of tariffs in India and its markets
There will be a special effect of the industry, and it is difficult to measure everyone, but on the large Indian export, say pharmacy, let’s understand the dynamics. More than a third of the volume of drugs consumed in the United States is performed in India. When you charge the tariff, depending on the special situation on the supply, some of which should be born by consumers and manufacturers. In general, I don’t think there will be a big impact. Many of the factors that will decide how the economy is generally going to be internal. Our current account deficit is good for about one and a half of GDP. The bigger driver of the Indian economy will continue to build houses, produce products and continue to expand cities. I think that concerns about special tariffs are opaque.
If you look at DXY, which is a composite tool for the dollar, it has already started to decrease. So, isn’t the rupee movement unique? The most important variable is the current account. If the current account is good, I don’t see any economic reason why Rupee is depreciating. The current account reflects the realities of the economy and the capital account. If people continue to remove their money, it may be under pressure for some time. If the economy begins to grow again, the flows will return. I expect the economy to restore momentum, and if it happens, there is no basic reason why Rupee will continue to depreciate.
How can markets adapt to new realities?
It is not only the reality of the outside world that markets are responded. India’s economy has also slowed down for the past six months. Does this reflect the main macroeconomic instability of the economy? No. The current account deficit is good, Inflation It is good that corporate balances are healthy, and bank balance is healthy.
History continues under this ad
The only thing that the economy is now suffering is weak demand. It is an easy-to-use problem that can be corrected through fiscal and monetary policy. Intentional the capital flows also returns to mind. As long as foreign institutional investors (FII) supports, there is no reason to believe that the economy will continue to suffer. In addition, I believe that we need the housing sector so that the economy does well to keep its restoration, and housing prices should not rise to economic activities.
In the last six months, we have seen some decline at the rate of flavors, so the new sale has decreased a little. I hope that there is enough competition in the market so that the developers bring prices to more sensible levels and restore housing activities.
Tax reliefs help promote consumption and investment costs. The monetary policy is equally important, as far as the RBI has eased some regulatory restrictions and provide liquidity and cut. I think cash support is really support that would be ideal for the economy.
If you return to the previous cycle from 2008 to 2013-14. The problem came later, as the fiscal impetus was not removed, and it is always very difficult to remove it. The continued government expenses have led to overheating the economy. On the other hand, the monetary stimulus, on the other hand, can be more easily turned.
History continues under this ad
On stabilizing the foundation leaks
I believe that if you invest in stocks, you must have at least three years of view or not. There will be several times that investors are entering and out of range, and it doesn’t matter when you go out, you can increase your contribution. What will be the connection of earnings? It is a simple way to think about it that the influence of flows multiplies in the short term. During any reasonable period, multiple returns is a very small driver. The growth of earnings is a much larger driver. And the growth of earnings, I think clearly depends on the domestic.
The idea that the investment has not taken remains a common concept that protects data. Cents, steel and real estate have viewed investments. The situation in power has now changed for everyone, as renewable sources require less capital and large amounts of Capex. Before capital investment is smaller, real capacity created was quite adequate.
About China Tariffs can benefit India
I do not subscribe to that view. If we want to invest in the country, we will work on the current account deficit. It’s a math reality. Whether you want to involve investment or supply investments that need to be determined. In my opinion, India can use additional capital to complete our contribution. We will have a comparative advantage in exporting items that we can be good as the fact that we are a purely exporter of services, but we need to introduce products. Therefore, it is necessary, therefore, it is an internal demand for growth production.
The apartment is a big decision to demand. All firm products require having a home. If you have five people in a room with a small house, there is only one fan, there is one AC, a limited amount of clothes and shoes that they can buy. If you have a bigger home, you will buy more products and production will do well automatically.
History continues under this ad
On the reduced influence of tariffs in India compared to China
India-China comparison is flawless. Both are in principle playing different role in the world economy. China is a capital provider. It buys US government bonds, which allows FIIS to have funds to invest other elsewhere. We are the recipient of capital. Economic laws will prevail, and bilateral agreements may take place between US and India to relieve more than tariffs. Despite the very high degree of uncertainty about what people will do, there is enough economic theory for us to understand what the consequences of certain actions should be on.
About whether India should worry about throwing
In economics, the throw has a very unique meaning. This applies when your inner price is higher than your export price. If some prices are low in China, they say steel, even export prices can be low. Price level can still fall to the point that Indian industries fall under pressure, but it really hurts the country. This steel can make more accessible and two wheels at more affordable prices. In this example, there would be the yield of steel companies, but other industries will benefit.
