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As there is a buzz around India’s journey to the 5-trillion-dollar landmark, we spoke to Saurabh Mukherjea, Founder & CIO, Marcellus Investment Managers to understand what will make India a 5-trillion-dollar economy.
Saurabh sounded quite ambitious and spoke about India in the light of a ten-trillion-dollar economy. He also shared the opportunities for MFDs and the skill sets needed for this journey.
Here are the excerpts.
What are the three things that will take India to a 5 trillion-dollar economy?
We are a 3.5-trillion-dollar economy already and we should not worry about achieving the 5-trillion-dollar mark. In fact, I think the goal should be to reach 10 trillion dollars.
Let me explain why.
Firstly, the power of UPI is evident. India is doing seven billion UPI (Unified Payments Interface) transactions a month which is driving tax collection and reducing capital costs for small businesses. The overall digital economy - GST, UPI, Aadhar and ONDC (Open Network for Digital Commerce), is giving India unique competitive advantages which will drive a fall in capital cost and a rise in economic growth over the next 10 years.
Secondly, the expected geo-political issues and disintegration in China over the next four to five years will create colossal space for India. Industries like smartphones, medical devices and electronics are likely to substitute China and create economic opportunities of around a trillion dollars. This could possibly be the fastest industrialisation in human history.
And, the third leg of India’s development is the rise of Indian women. If you look at the statistics, more women are now studying and the pass rates are far higher than men. Women have also become the preferred workforce across industries. However, India’s female workforce participation ratio is only 20%, lower than Afghanistan and Saudi Arabia. As Indian women rise, it will give the economy a boost and the bulk of economic decision-making is likely to be in their hands.
With these three legs, the 10 trillion-dollar story is not very far away.
What opportunities does the 5 trillion-dollar economy hold for MFDs?
Expanding on the ten-trillion-dollar economy, India’s household financial wealth is very modest at around a trillion dollars. However, if you look at the overall household balance sheet with all other assets, it adds up to 10-trillon dollars. This means 90-95% of household wealth is in physical assets.
If you look at data from RBI, SEBI and IRDAI, roughly 1% or 100 billion dollars toggle from physical to financial assets every year. This in turn means a trillion dollars of incremental flows into the financial system.
From the viewpoint of MFDs, it is merely a question of repositioning their business.
What skillsets does an MFD require to tap the 5 trillion dollar opportunity?
The obvious skill set is selling, which is in abundance in this enterprising-driven company. However, it is important to manage clients’ wealth instead of selling high-commission products and develop the ability to assess their needs and create a plan accordingly.
