Opportunity in India?

“India may be a land of over 100 problems, but it is also a place for a billion solutions” – Kailesh Satyarthi

Changes are afoot in India, changes that will likely raise the sustainable growth rate for the Indian economy. This week, we examine some of the likely effects of these changes and how they might eventually interact with the country’s equity markets.

The black economy…

For some time, the sheer scale of India’s ‘unofficial economy’ has been seen as a key impediment to India’s long-term growth prospects. Estimated by some to represent close to two-thirds of the total economy, the so-called ‘black economy’ generates more income by a distance than agriculture and industry together. Various efforts have been made down the years to bring these dark, untaxable, transactions into the economic light. From Aadhaar (a unique 12-digit number that creates a digital identity for more than 1 billion people, enabling individuals to be rapidly identified using biometric data) to the introduction this year of the Goods and Services Tax (GST) (replacing the patchwork of indirect taxes and duties), these efforts seem to be starting to bear fruit.

By some estimates, this current administration’s recent efforts alone have already increased the number of taxpayers by 20-25% and are thus expected to significantly increase future tax revenues. In a country where the growth prospects have long been blighted by the government’s inability to fund much needed infrastructure, this prospective revenue boost should prove very helpful.

In addition, the rationalisation of the tax regime should lead to improved productivity and lower compliance costs, as interstate supply chains will basically be treated the same as intrastate production. The government’s recent Economic Survey estimated that Indian interstate trade accounted for 54% of GDP, well below that of the US or China, though higher than Canada or Indonesia, which have more challenging geographical barriers to trade. Assuming a convergence with levels of internal trade in the US or China, the GST could provide a further boost to output growth.

Bank bailout

Another long-standing impediment to growth has been the parlous state of the state-owned banks’ balance sheets. Bad debt ratios doubled over the last year as the Reserve Bank of India (RBI) concluded an asset quality review that forced some accounting realism onto the banks. However, recognising these losses left banks unprofitable, undercapitalised and unable to lend to the real economy. On 24 October, India’s government bowed to the inevitable and announced that it would inject 2.1 trillion rupees into its state-owned banks.

This bank bailout was cleverly structured to take advantage of the demonetisation experiment, which left the banking system flush with excess liquidity as ‘mattress cash’ was converted into deposits. In the scheme, the RBI will drain excess liquidity from the system, and the government will inject 1.35 trillion rupees into the banks as equity capital. All of this should help to unclog the credit channel, and unleash some of the pent-up investment forces.

As a result of these wide-ranging efforts to restructure and streamline the economy, India has leapt up some 30 places to 100 in the World Bank’s Ease of Doing Business report for 2018. Of the 10 areas covered by the report, India made it easier to conduct business in eight of them, with the biggest improvements being seen in the areas of resolving insolvency, getting credit and paying taxes.

Investment conclusion

So, the growth outlook is improving, but what does that mean for investors? The link between the growth of a country’s output and the corporate profits quoted on its domestic indices can be muddy as we’ve explored before. Sector composition, government interference and the influence of overseas profits are among the potentially relevant factors. However, in spite of all this, there has been a statistically substantial relationship between the economic performance of India relative to the wider emerging Asia block and relative equity market performance. With India’s long attractive growth prospects now on a more solid footing, we see Indian stocks as a good addition to our emerging markets triumvirate of China, Korea and Taiwan

A practical guide to burial and cremation

Thinking about your own funeral can be difficult, but there are some practical arrangements you should consider.

Burial vs cremation

Firstly, would you prefer burial, or cremation? Burial is the traditional option for many people. However, there are a number of disadvantages to burial:

  • burial plots can be more expensive over the long term, than memorials which hold ashes
  • burials generally need to be done more quickly than cremations
  • cemetery restrictions may limit personalisation options for graveside adornments, like monuments or flowers, and
  • laws and logistics make it difficult to move a body after it has been buried.

Cremation offers some advantages:

  • returning remains home, for families who live in different countries, is more straightforward with cremations
  • families who want to move overseas can take the ashes of their loved one with them, and
  • cremation allows more time for family members to travel.

It’s possible to have a permanent memorial set up in a cemetery for both burial and cremation. Creating a dedicated place for future generations to pay their respects and reflect on their heritage is a way to keep family legacies alive.

Religious exceptions

With the exception of Buddhism and Hinduism, most religions prefer burial over cremation. There are exceptions, but this should be discussed with your family or religious leader.

Religions that support burial

Judaism, Islam and Eastern Orthodox (including Greek Ortrhodox and Russian Orthodox) faiths will only accept burial, not cremation.

Religions that support cremation

Buddhism and Hinduism both have strong associations with cremation. Followers believe that cremation is required so that the soul can be released from the cycle of reincarnation.

Religions that are open to both burial and cremation

Catholic, Anglican, Methodist and Baptist faiths now accept cremation, although burial has always been the preferred option. Burial and cremation are both accepted in Aboriginal spirituality practices and by Jehovah’s Witnesses.

Cost per state

There are no rules around the cost for funerals, regardless of whether they’re cremations or burials. Like a wedding, more elaborate events will cost more. Adding more expensive coffins, floral arrangements and other features in the service can increase the cost up to more than $15,000.

The average cost for a burial in any Australian State or Territory is just over $7,000 and just under $7,000 for a cremation.


City Average burial cost Average cremation cost
Sydney $8,225 $7,607
Perth $8,082 $7,402
Melbourne $7,961 $7,324
Brisbane $7,611 $7,086
Adelaide $6,992 $6,492
Hobart $6,752 $6,389
Canberra $6,399 $6,000
Total average cost $7,432 $6,900


Source: finder.com.au. The Cost of a Funeral in Australia

The costs vary greatly between burial and cremation when it comes to the interment, the term for placing a body in the ground or ashes into a memorial. For example, a traditional allotment burial allotment for 99 years at Sydney’s Waverley Cemetery costs around $61,000, while a plaque in the wall of the memorial garden for the same duration will cost around $10,000. Interment is a lot more affordable in country areas, but may not be as easy for family members to visit.

Talk to your family

It’s important to talk to your family about your wishes, and plan ahead, so they know what you want and are set up to be able to provide it. Funeral insurance is a way to make the process easier for your family at an unsettling time so they can confidently celebrate the life you shared together.

Could your savings cover the cost of all the added expenses that come with a funeral? Visit Insuranceline to find out how Funeral Insurance could help alleviate the cost to your family in case something happened to you.