2024 promises to be a significant year for elections across the world. Taiwan heads to the polls in January, India in April/May, and the US and probably the UK will also vote later in the year. India is famously the world’s largest democracy, with more than 900 million registered voters, and this election comes at an interesting time. Narendra Modi has been Prime Minister since 2014, and the BJP won the last general election handily with 303 of the 545 available MPs – but will it be so straightforward this time?

Is Modi set for a third term?

Entering December’s state elections in Madhya Pradesh, Rajasthan, Chhattisgarh, Telangana and Mizoram pollsters had low expectations for the national governing BJP party because these have never historically been strongly pro-BJP states. How things have changed. The BJP scored a hat-trick of wins across Madhya Pradesh, Rajasthan, and Chhattisgarh, and increased their number of seats in Telangana and Mizoram. We believe these results make the likelihood of Modi’s third term as Prime Minister in 2024, highly probable – some pundits have even begun to talk of Modi’s fourth term, in 2029! As a strongly pro-growth government, we believe this bodes well for continued reform and development over the medium term: the reforms of this latest term have been a fundamental factor behind India’s recent strong performance.

A tax receipt bonanza like Virat Kohli hitting a six

Even as the rest of the world is grappling with highly restrictive financial conditions and persistent inflation, India’s GDP has grown by 7.0% over the four quarters to Q3 2023 1, powered by growth in private consumption and investment, world leading digital public infrastructure, and an economy that is formalising at a much faster pace than anyone expected.

In many respects, India is the most advanced digital economy in the world, underpinned by massive government investment in the publicly-owned ‘India Stack’. This is a unique collection of technology layers to support the interface between government and private companies in offering tech-enabled products and services. This includes the successful Unified Payments Interface, a real-time digital payments platform that facilitates over 11.4bn transactions per month 2 and now represents 72% of payments in India by volume from a base of virtually zero in 2017. 3

The speed and convenience of this digitised economy has brought vast amounts of transactions into the formal financial system, with the consequence of not only increasing financial inclusion but also the available tax receipts for the Indian government. The pace is startling. Monthly GST (goods & services tax) receipts have consistently beaten expectations for more than a year now, and whenever those expectations were recalibrated, the final data has still surprised to the upside.

To what purpose is this taxation bonanza being put? At the start of the COVID pandemic it became a clear priority of the government to ensure that nobody starved, so an existing free food programme was expanded to cover around 800 million people in the country. That programme has recently been announced to extend for the next five years and, on top of a social security system and health system (private insurance that is publicly funded), that provides a significant social safety net that enhances the effective disposable income and credit worthiness for large swathes of society. As we see from the experience in the West, there are few major economies in the world where the government has an abundance of fiscal headroom, but that’s the happy position in which India now finds itself.
A large, diverse and liquid stock market

From an investment perspective, what this means for investors in Indian equities is that there is value in paying attention to companies that are well positioned to benefit from these trends, especially the transition of capital from the informal to formal economy. The breadth of opportunities in the Indian equity market is large, with more than 400 companies with a market capitalisation over $1bn, so active investors have a rich pool of opportunities from which to select.


Amid all this optimism, it is vital to remember that investors always have a duty to keep an eye on potential risks. In India’s case, such risks include the strength of the US dollar or a devaluation of the Chinese renminbi; the former in part because it influences India’s oil costs (India is one of the world’s largest importers of oil), the latter because a devalued renminbi could unleash a competitive devaluation around the world.


International investors have in the past put more weight on the risks India faces than its opportunities. Indeed, they pulled money out of India in 2022, and still were as recently as March 2023. Domestic investors, on the other hand, have been putting vast sums into the Indian market on a monthly basis thanks to a new generation of investors in their 20s and 30s becoming financially active. This cohort invest via long term systematic saving plans into Indian equities, with monthly flows now in excess of $2.5bn per month. The increased presence of Indian retail investors in the market is a structural change that has altered the dynamic of how the Indian market might behave into the future. More permanent domestic capital should lead to stability in asset prices compared to history, which was more dominated by non-specialist ‘tourist’ international investors.


Taken all together, the strong fiscal position of the government, India’s excellent demographic position, the modest inflation, the healthy economic growth and the technical underpinnings of a growing pool of investors entering the market make, in our view, a compelling case for why investors should pay close attention to India as an investment destination.

1 OECD, G20 GDP Growth – third quarter of 2023, OECD
2 NPCI, product statistics, October 2023, Unified Payments Interface (UPI) Product Statistics | NPCI
3 BofA Securities Global Research, Digital infra: Game-changing platforms helping in democratization of access, March 2023

The value of active minds: independent thinking

A key feature of Jupiter’s investment approach is that we eschew the adoption of a house view, instead preferring to allow our specialist fund managers to formulate their own opinions on their asset class. As a result, it should be noted that any views expressed – including on matters relating to environmental, social and governance considerations – are those of the author(s), and may differ from views held by other Jupiter investment professionals.

Important information

This document is intended for investment professionals and is not for the use or benefit of other persons. This document is for informational purposes only and is not investment advice. Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested. The views expressed are those of the individuals mentioned at the time of writing, are not necessarily those of Jupiter as a whole, and may be subject to change. This is particularly true during periods of rapidly changing market circumstances. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Holding examples are for illustrative purposes only and are not a recommendation to buy or sell. Issued in the UK by Jupiter Asset Management Limited (JAM), registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ is authorised and regulated by the Financial Conduct Authority. Issued in the EU by Jupiter Asset Management International S.A. (JAMI), registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg which is authorised and regulated by the Commission de Surveillance du Secteur Financier.

No part of this commentary may be reproduced in any manner without the prior permission of JAM, JAMI or JAM HK. 29664