What India’s Investment Policy Shifts Mean for ETFs

June 8th at 2:00pm by Tom Lydon

ETF IndiaAfter the elections in India, the government has taken swift actions that could augment the country’s economy and subsequent exchange traded funds (ETFs).

India’s United Progressive Alliance government is focusing on infrastructure spending and encourage foreign direct investment, write Abhrajit Gangopadhyay and Mukesh Jagota for The Wall Street Journal.

The government will manage their economy by combining sectoral and macro level policies to counter the effects of the global slowdown. Reforms will also take place in the banking and insurance sectors to enhance their resources.

President Pratibha Devisingh Patil also states that India may allow more overseas investment by selling shares in state-run companies and infuse lenders with more capital to goad economic growth, report Bibhudatta Pradhan and Kartik Goyal for Bloomberg. India has long had limits on foreign investment, so that it would allow more of it could benefit both their economy and, in turn, ETFs.

The Central Bank has cut interest rates six times since October and the government has reduced taxes. Monetary and fiscal policies combined are estimated to be worth 7% of GDP. The economy is projected to grow 6% in the year starting April 1. The fiscal deficit grew to 6.2% of GDP in the year ending on March 31.

  • PowerShares India (PIN): up 57.9% year-to-date

ETF PIN

  • WisdomTree India Earnings (EPI): up 66.4% year-to-date

ETF EPI

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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