India is not going to be the only game in emerging markets forever, in fact last year was an unusual situation, says Arvind Sanger of Geosphere Capital Management.
The recent volatility seen in the market with FII outflows is more normal, he says. "I think in a way it's good because it puts more of an onus on Indian policy makers, not to just count on foreign money showing up without questions asked, but foreign money showing up with expectations," he told CNBC-TV18.
On the policy front, he does not expect GST to be transformational in the short-term. According to Sanger, it will probably take over 3-4 years for GST to have a meaningful effect.
"GST is not the most important thing. Though it will certainly set the tone for future capex," he adds.
According to him, there are plenty of other issues that require urgent attention – whether there will be significantly more road contracts; will the challenges plaguing the power sector abate soon, among others?
Given the way things stand, the Indian economy needs government-led infrastructure spending to boost growth, says Sanger, considering the private sector is significantly logjammed and locked up in terms of capex cycle.
He says with the government trying to meet its deficit target and the various constraints in place, it has ended up continuing to squeeze government spending. Sanger believes part of the challenge is getting rid of wasteful subsidies and increasing investment in infrastructure.
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