Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

PK Basu has 35 years experience covering Asia's economies and markets (equities, fixed income and currencies), including 20 years covering the global economy. He was Chief Economist (SE Asia & India) at Credit Suisse First Boston for 5 years, and Chief Asia (x-Jpn) Economist at Daiwa Securities for a similar period. Among other roles, he was global head of research at Maybank Kim Eng, Malaysia equity research head and chief ASEAN economist at Macquarie, Chief Economist at ICICI Securities, ASEAN economist and Asia sector strategist at UBS and the first chief economist at Khazanah Nasional (where he was co-head of research, and led all agri-business initiatives). PK Basu started his career in the Asia Service of WEFA (Wharton Econometrics) in Philadelphia in 1990, rising to be Director of their Asia Service in June 1994. 
PK's book, "Asia Reborn: A continent rises from the ravages of Colonialism and War to a New Dynamism" won the Tata Literature First Book Award (non-fiction) for 2018. It is the first single chronicle of the modern economic and political history of the whole of Asia (from Iraq and Turkey to Korea and Japan, and everything in between), told from an Asian perspective.

Chief Economist & Political Strategist

Exports/ Bonds/ Rural/ US-China/ Xinjiang

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India: Strengthening Recovery Will Defy the IMF's Pessimism on FY2020/21 Growth

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Macroeconomics

India offers new manufacturing units an effective corporate tax rate of 17%, a completely flexible labour market (with new employees taken on fixed-term contracts that needn't be renewed upon expiry), and production-linked incentives to encourage export-oriented industry, which will induce a strong investment revival. Base effects will help growth (with real GDP likely growing over 12% YoY) in FY2021/22 and inflation (likely falling below 4% YoY in Apr-Jun 2021), allowing further RBI rate cuts that help strengthen growth, with privatization (including large-ticket strategic sales) substantially boosting the fiscal balance.  Real GDP growth should average 10% annually in the decade ahead. Stay Overweight India, as growth will boost EPS and hence improve valuations.The  BoP current account surplus (2.1% of GDP in Jan-Sep 2020, after the latest surplus for the Jul-Sep 2020 quarter of 2.4% of GDP) provides ample room to boost domestic demand in 2021 without significantly affecting the external balances. Although the fiscal deficit soared by 40.3% YoY in April-September (the first half of FY2020/21) while the economy was largely shut down and revenues slumped, public expenditure also was restrained (declining 0.6% YoY in Apr-Sep20, and still up only 4.7% YoY in Apr-Nov20 after a good recovery in Oct-Nov20). In October 2020, gross tax revenue expanded 16.9% YoY, accelerating to 23% YoY in November 2020, and the fiscal deficit for April-November 2020 was up a more modest 33.1% YoY. Despite the improved revenue in the second half of the fiscal year, there will be scant room for fiscal manoeuvre in FY2021/22. But this year's economic reforms will provide a massive medium-term boost to the economy. The most significant are the labour reforms, which have simplified 44 codes into four simple ones (easing compliance) and allowed all new employees to be taken on fixed-term contracts. This neatly gets around the biggest problem in India's labour market (the difficulty of firing workers, which inhibits hiring), and makes India's labour market incredibly flexible. When combined with a corporate tax rate of 17% for new manufacturing units (as low as any in Asia), and production-linked incentives (PLI) for specific export-oriented sectors, India is likely to attract large inflows of FDI and domestic investment into manufacturing in 2021, as global value chains also begin shifting to India (as ASEAN and India already have an FTA, as does India have with neighbours Bangladesh, Sri Lanka and Nepal). Real GDP growth is likely to be +3% YoY in the current quarter, +7% in Jan-Mar 2021, +25% YoY in Apr-Jun 2021 (still leaving that quarter's GDP 4% below Apr-Jun 2019), 10% YoY in Jul-Sep 2021, and 8% YoY in Oct21-Mar22 -- enabling real GDP to grow over 12.5% YoY in FY2021/22. This year's structural reforms (including a diluted version of the farm reforms) will provide a medium-term boost to productivity and employment across a broad swathe of the economy, enabling real GDP to sustainably move toward 10% annual growth for the decade.  Stay Overweight India, despite the seemingly stretched valuations (which will result in a short-term correction early in 2021).

India offers new manufacturing units an effective corporate tax rate of 17%, a completely flexible labour market (with new employees taken on fixed-term contracts that needn't be renewed upon expiry), and production-linked incentives to encourage export-oriented industry, which will induce a strong investment revival. Base effects will help growth (with real GDP likely growing over 12% YoY) in FY2021/22 and inflation (likely falling below 4% YoY in Apr-Jun 2021), allowing further RBI rate cuts that help strengthen growth, with privatization (including large-ticket strategic sales) substantially boosting the fiscal balance.  Real GDP growth should average 10% annually in the decade ahead. Stay Overweight India, as growth will boost EPS and hence improve valuations.The  BoP current account surplus (2.1% of GDP in Jan-Sep 2020, after the latest surplus for the Jul-Sep 2020 quarter of 2.4% of GDP) provides ample room to boost domestic demand in 2021 without significantly affecting the external balances. Although the fiscal deficit soared by 40.3% YoY in April-September (the first half of FY2020/21) while the economy was largely shut down and revenues slumped, public expenditure also was restrained (declining 0.6% YoY in Apr-Sep20, and still up only 4.7% YoY in Apr-Nov20 after a good recovery in Oct-Nov20). In October 2020, gross tax revenue expanded 16.9% YoY, accelerating to 23% YoY in November 2020, and the fiscal deficit for April-November 2020 was up a more modest 33.1% YoY. Despite the improved revenue in the second half of the fiscal year, there will be scant room for fiscal manoeuvre in FY2021/22. But this year's economic reforms will provide a massive medium-term boost to the economy. The most significant are the labour reforms, which have simplified 44 codes into four simple ones (easing compliance) and allowed all new employees to be taken on fixed-term contracts. This neatly gets around the biggest problem in India's labour market (the difficulty of firing workers, which inhibits hiring), and makes India's labour market incredibly flexible. When combined with a corporate tax rate of 17% for new manufacturing units (as low as any in Asia), and production-linked incentives (PLI) for specific export-oriented sectors, India is likely to attract large inflows of FDI and domestic investment into manufacturing in 2021, as global value chains also begin shifting to India (as ASEAN and India already have an FTA, as does India have with neighbours Bangladesh, Sri Lanka and Nepal). Real GDP growth is likely to be +3% YoY in the current quarter, +7% in Jan-Mar 2021, +25% YoY in Apr-Jun 2021 (still leaving that quarter's GDP 4% below Apr-Jun 2019), 10% YoY in Jul-Sep 2021, and 8% YoY in Oct21-Mar22 -- enabling real GDP to grow over 12.5% YoY in FY2021/22. This year's structural reforms (including a diluted version of the farm reforms) will provide a medium-term boost to productivity and employment across a broad swathe of the economy, enabling real GDP to sustainably move toward 10% annual growth for the decade.  Stay Overweight India, despite the seemingly stretched valuations (which will result in a short-term correction early in 2021). 

DSP BlackRock Liquidity Fund (DSLQYDG IN)

India's 2020 Reforms Will Usher in a Decade of Spectacular Growth from 2021 On