Morgan Stanley’s Chetan Ahya leads the lineup for a third consecutive year. “By incorporating inputs from multiple dimensions — top-down, bottom-up, lateral thinking — he is able to provide intelligent food for thought as well as develop high-conviction views,” lauds one investor. The Singapore-based economist believes a challenging cycle lies ahead “as painful adjustments will need to be made and as India reverses the distortions in the prices of land, labor and capital,” he explains. At a macroeconomic level, Ahya contends, India will only gradually turn around the decelerating output, persistently high inflation, crippling current-account deficit and weak deposit growth it has suffered since the global credit crisis. Real gross domestic product expanded by 4.4 percent over the three months through June, compared with the year-earlier period, down from 4.8 percent in the previous quarter; and in September wholesale prices rose at their fastest rate in seven months, at a year-over-year 6.46 percent. These data indicate that “the economy needs more time to heal and come out of the stagflation-type environment,” the 44-year-old believes. Hampering the country’s recovery are the rapid rise of real rates in the U.S. and a strengthening dollar. Inevitably, Ahya advises, India must elevate rates to keep pace. He believes the Reserve Bank of India will have to hike real rates (based on consumer price index inflation) by 250 to 300 basis points over the next 12 to 15 months if U.S. ten-year yields rise by 75 to 100 basis points. Although that course could lead to a spike in nonperforming loans and a more severe drag on the economy, it is “the only credible way to demonstrate the government’s commitment to reducing the current-account deficit,” he says. Ahya “has the ability to break down complex issues into simple terms,” attests another backer. — Carolyn Koo |
The 2013 All-India Research Team: Economics, First: Chetan Ahya
