India is growing at a fast pace. With a GDP growth rate of 8.4% clocked in Q3 FY24, India is in a sweet spot. On the back of an 11.6% increase in manufacturing activity and a 9.5% growth in construction, India’s Q3 GDP surge was the highest in six quarters. This is particularly impressive compared to the slowdown in many large global economies.
While there is no doubt that the strong growth emphasises the inherent strength of the Indian economy and its growth potential in the future, some of the credit must go to the government’s reform agenda and its aim to make Bharat Aatmanirbhar: The move towards ‘Make in India’, ‘Production linked incentive (PLI)’ schemes as well as the drive towards capital expenditure, are measures that have contributed to our growth agenda.
Other factors that are driving this momentum include:
- India’s rapidly expanding middle class, which continues to drive consumer spending.
- The Indian equity market’s standout performance in recent months, India’s market cap has scaled the $4 trillion mark and emerged as a key global equity market, underscoring its growing influence and attractiveness to investors worldwide.
With continued momentum, India is widely expected to ascend to the ranks of the world’s top three economies by 2030, underscoring its emergence as a major player in the global economic landscape.
The government’s commitment to reform measures has boosted business confidence among India Inc., which could function as a catalyst to stimulate private investment. Investing in the ‘Rising India’ story therefore presents consumers with the opportunity to secure their long-term financial goals through capital appreciation.
Although many instruments are available in the market, Unit Link Plans (ULIPs) offered by life insurers are a unique way for consumers to capitalise on the India growth story and realise their financial aspirations, while benefiting from the security of life insurance.
We have also witnessed the emergence of innovative solutions such as Investment-Linked Plans (ILPs). These products offer multiple benefits in a single product including high life cover, financial protection, and wealth generation opportunities. These are comprehensive solutions that provide policyholders with coverage for their whole life (coverage till age 100) with a focus on market-linked returns. Some of them also offer policyholders a Systematic Withdrawal Plan, which provides liquidity for their investments.
The 2021 Indian Economic Survey found that 65% of medical expenditures are out-of-pocket (OOP). Critical illnesses can strike at any age and healthcare costs can be exorbitant, so people often use long-term savings to cover medical emergencies. The post-diagnosis and care payments are significant financial drains even if treated completely.
While choosing the right solution is important, investing in one early is equally critical. This is to reap the benefits of long-term compounded investment returns. As the adage goes, time in the market is better than timing the market.
Harshad Patil, Chief Investment Officer (CIO), Tata AIA
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Published: 22 Mar 2024, 03:53 PM IST