Here’s how India can fight economic slowdown; veteran emerging markets champion Mark Mobius’ mantra

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Published: November 12, 2019 11:27:08 AM

Amid the ongoing economic slowdown, emerging markets champion Mark Mobius says that one of the ways to tackle the problem is by boosting spending on infrastructure.

“The euro is now undergoing negative rates. You have to pay the bank to keep your money. So this is a very strange and opportune moment for India,” Mark Mobius said.

Amid the ongoing economic slowdown, emerging markets champion Mark Mobius says that one of the ways to tackle the problem is by boosting spending on infrastructure. According to the expert, India can look to raise capital from international markets. “India should look to issue bonds internationally. This will help the country to grow, and boost exports,” he said in an interview to CNBC Tv18. Mobius pointed out that a lot of high risk countries are issuing bonds at very low interest rates. “The euro is now undergoing negative rates. You have to pay the bank to keep your money. So this is a very strange and opportune moment for India,” he said.

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Notably, economic data indicates deeping of slowdown. The latest evidence is the data on industrial output, which showed that India’s IIP (Index of Industrial Production) fell by 4.3% on-year in September, indicating a severe contraction in the activity. Consumer durables production was down by 9.9%; manufacturing slipped by 3.9%, and capital goods output fell by as much as 20.7% on-year in the month. Industrial production figures for the previous month of August were revised to show a deeper contraction at 1.4% than that recorded at 1.1% in the previous reading.

In Mobius’ assessment, both internal and external factors are contributing to the ongoing slowdown. “50% of India’s problems are because of indigenous problems. We will look for lower taxes in India and bringing in foreign investors in infrastructure will be key,” the expert had said. Sharing his valuable insights on asset allocation, Mark Mobius said that investors should look to keep at least 10 per cent in physical gold. “I’m bullish on gold, as you can imagine. I’m not saying that it will not go down, of course it’s going to fluctuate,” Mark Mobius said.

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