A bright picture of the recent festival of lights. Also a key consumption period. This Diwali sales were up 24% year-over-year versus a 13% growth last year.
Some more very robust data. But here for the whole month of October, for the holiday period itself, Maruti's sales, India's largest car company, were up 90% year-over-year.
Two words — very strong.
Here's part of why we believe this strong economic growth will at least be maintained or accelerate. Rising final demand is building on a complete trifecta of interest rate, personal and sales tax cuts along with government pay raises. Maruti's GST or sales tax rate fell in September just before Diwali in October from 29% to 18% on smaller cars. That's a major step affordability change. Hence that 90% growth in sales. We calculate that these four economic changes alone will add around 2.1% to GDP.
And this is the base, the wealth effect. If final demand is looking strong, a major contributor to that confidence must be that household wealth is rising — and in India as we can see here it's been rising fast in the three main wealth channels for the past 3 years. Gold is now up around 60% year to date and India has the largest hoard of gold in the world by far. And as a multiple of these central banks, Indian household gold holdings are now worth around 9/10 of Indian GDP, making India a major outlier among EM or DMs, and this is not even counting the temple gold holdings.
As a background to this slide, Indian government capex has risen from 1.6% of GDP around 10 years ago to 3.2% in 2024. And now the private sector which has deleveraged by some 40% over the past five years in terms of capex is getting started.
That Indian government capex has risen so strongly and also alongside a fall in the fiscal deficit is a pretty amazing thing in today's increasingly indebted sovereign world.
Can the reserve bank cut rates some more? Yes, India is eventually entering a benign disinflationary cycle.
The PMI is strong and employment has risen for 20 straight months. The PMI maps roughly to corporate revenue. So clearly revenue looks solid.
For the past 12 months, as already noted, India has not performed and we would like to add the word yet. A lot of the performance on this page is of course tech capex related.
Looking at the past 30 years, roughly for as long as we have invested in India, it's clear that only two markets have delivered strong long-term 30-year performance.
Are foreign investors perhaps not looking at the same data that we just ran through? The past three years, they are around flat, but domestic investors have invested $166 billion into their own market for that period. That's about as bifurcated as it can get.
A pretty clear chart and trend. These domestic investors are also clearly not stepping back.
There is a wall of power infrastructure investment headed towards India. The middle bar here is the United States which has seen power capex go from frankly investment backwater to front and center as a high growth proxy for AI-led demand. Even if all of that comes to fruition, what you see there in the orange, it will still be substantially less growth than is going to take place here in India. That's true in absolute terms which you see on the page. And if you think in percentage terms, India's growth will be something like three times as great as that of the United States. In the US, it's already led to something like 100% rerating of power stocks.