1. The India Story
At an inflection point
Manisha Singh
Research Analyst, Investment Research Group
July 23, 2014
Executive Summary
India is a multi-party parliamentary federal democracy. With a
population of 1.2 billion people, India is the largest democracy in
the world. It is the third largest economy in Asia and seventh largest
in the world. It earned its freedom from the 200-year long British
rule in 1947 and has since had 16 elections for the lower house
(Lok Sabha). A republic with a multi-party system, India has six
recognized national parties, including the Indian National Congress
(INC) and the Bhartiya Janata Party (BJP), and more than 40
regional parties. It is a diverse mix of multiple religions and there
are over 400 different languages and dialects spoken in the
country, 22 of which are officially recognized by the Indian
constitution. India is unarguably a pluralistic, multi-lingual and a
multi-ethnic society.
In the 2014 general elections completed on May 16, the BJP had a
landslide victory which put its pro-reform prime-ministerial
candidate, Mr. Narendra Modi at the helm of India’s affairs. Modi’s
focus areas for governing India are development, economic growth
and transparency, the three messages he deeply emphasized
during his aggressive election campaign. Under a Modi
administration, the hope is, land will be cleared, permissions will be
granted, and roads and other infrastructure will be built. His mantra
for the five-year elected tenure is “minimum government, maximum
governance”. In the first month of his regime, Modi lived up to his
mantra by building the leanest cabinet seen in years, by way of
consolidating smaller ministries into logical larger ones, which
eliminates coordination overhead and speeds up decision making.
The reform-oriented budget rolled out in the regime’s second month
is also showing promise and is a step in the right direction to
generate employment and foster growth in India. We view the
recent election outcome as a medium-term and long-term positive
for the economy, as it should accelerate economic reforms and,
coupled with continued prudent monetary policy, set the stage for a
steady improvement in India’s macroeconomic fundamentals.
Key Takeaways
 Dawn of a new pro-growth governance era
facilitated by the decisive election outcome.
 Macro-economic fundamentals seem poised
to recover after bottoming out.
 Economic growth expected to diversify due to
a renewed thrust toward the manufacturing
sector.
 Financial markets, business and investor
sentiment at all-time highs.
 India’s monetary policy-making regime infuses
deep confidence in both domestic and foreign
markets with its recent track record and a
world renowned economist (ex-International
Monetary Fund) at the helm.
 Neutral short-term view, but bullish medium
and long term views.
PLEASE NOTE: FOR IMPORTANT DISCLOSURES, INCLUDING POTENTIAL CONFLICTS OF INTEREST, PLEASE SEE THE LAST
PAGE OF THIS PUBLICATION.
© 2014 Ameriprise Financial, Inc. All rights reserved.

2. The India Story July 23, 2014
India breaks electoral shackles
India’s 2014 general election was historic in more ways than
one. For the first time in three decades, the country voted a
single political party into power, which refreshingly eliminated
the need for a coalition government to run the nation. BJP’s
landslide victory by an unprecedented margin added to its
thunder. Also, this election saw the highest voter turnout in the
history of independent India, with a significant spike in younger
voters. An increased use of social media was witnessed in this
election, which not just attracted millions of younger and first
time voters to polling booths, but also helped the winning party
deliver its campaign messages very effectively. This helped
results for the BJP and also revolutionized the election process.
In the last several decades, Indian politics witnessed increasing
fragmentation due to local, rather than national issues taking
center stage. This in turn gave stimulus to identity politics
based on caste, community, religion, region, and minority
groups among others. This trend towards fragmentation made
coalition governments a reality. Hence, in the last 30 years no
single party won an absolute majority and so, multiple parties
joined forces and formed the government at the center. This
implied an accommodation of vested interests from the very
outset. It created a huge drag on all aspects of governance and
very predictably impeded the growth that India could potentially
achieve, but fell short of. Especially, in the last decade this
third-largest Asian economy slowed down due to corruption,
bureaucratic red tape and policy paralysis, and the national
GDP fell from a peak of 9.3% in 2011 to under 5% in early
2014. Given that context, and the fact that voters have finally
broken free from the shackles of divisive politics, the word is
out that India has clearly voted for a ‘change’ this time.
Growth to recover from a trough
From an economic perspective, it is important to recognize what
elections can and cannot affect. Growth consists of two
components: cycle (driven by fiscal and monetary policies,
global growth and supply shocks) and trend (driven by
investment, employment and productivity). Business cycles in
any economy will continue irrespective of the government in
power, but elections play an important role in driving
fundamentals and in shaping the investment outlook, which in
turn determines trend or long-term potential growth.
In India’s case, both the business cycle and the trend are at
their lows. Composite leading indices for India show that
business cycle downturn seen in the last three years is the
worst in the history of the series. Additionally, trend growth has
also fallen. This drop is a result of both lower investment and a
fall in productivity due to slowdown in global growth, policy flip
flops, delayed government approvals and stressed balance
sheets. India is actually sitting at the cusp of both a business
cycle, as well as trend growth, recovery.
The timing of this new pro-reform government could not have
been more opportune as India has moved past key macro
hurdles it faced in the last few years. India’s current account
deficit has fallen to manageable levels (from 4% of GDP to 2%),
growth seems to have bottomed out, inflation is peaking and
the currency has started to look stronger. We expect India’s
growth recovery to be gradual as fiscal and monetary policies
will likely remain relatively tight in the immediate future.
GDP boost through diversification
India’s GDP is primarily composed of the services sector,
followed by the industrial and agriculture sectors. The last
decade witnessed a sizeable increase in the share of the
services sector and a similar decrease in the agriculture share.
India’s new Prime Minister, Modi, governed the state of Gujarat
as the Chief Minister from 2001-14. The state comprises only
5% of India’s population but accounts for 16% of the country’s
industrial GDP and 22% of its exports. His 13-year long regime
built a highly industrialized and prosperous state that is now
considered a successful model which Modi is trying to replicate
at the center.
Modi’s policies, as reflected in his new budget, focus more on
developing agriculture and the industrial and manufacturing
sectors, and raising their share in national GDP. He has laid out
plans to turn around the country’s struggling power sector to
meet the massive demands of near future, to encourage
renewable sources of energy generation, and to augment
supply side mainly in agriculture to contain high food inflation.
He has announced numerous infrastructure projects to develop
new ports, roads and airports that will have two-fold benefits:
improve ease of doing business (improving overall productivity),
and create new jobs (tackling unemployment woes). These
projects will be funded through fast-track, investment-friendly
and predictable public-private partnerships (PPP) mechanism.
© 2014 Ameriprise Financial, Inc. All rights reserved. - Page 2 of 6

3. The India Story July 23, 2014
Peaking markets and sentiments
An economy that has been plagued by supply-side bottlenecks
and legislative and bureaucratic paralysis in the last several
years, is now beginning to show promising signs of recovery.
The Indian stock markets already touched their all-time highs in
early July due to positive global sentiment and optimism around
the new government’s strong pitch for fiscal prudence. The
decisive election outcome, a pro-reform government in power
and a charismatic Prime Minister (who has an impressive track
record and reputation of being a fierce “implementer”), have
given domestic and foreign investors a favorable view of India’s
investment opportunities. As of the start of June, aside from a
surge in debt inflows, the Indian equity markets saw net inflows
of $15 billion, highest ever for the time period. The annual
budget rolled out in early July unveiled a number of measures to
attract foreign investment, with the most notable one being an
increase in foreign direct investment (FDI) cap from 26% to 49%
in defense and insurance sectors. This has generated
significant foreign interest and has upped the ante on global
confidence in Indian market versus its competitors.
Robust Central Bank
India appointed a former IMF (International Monetary Fund)
chief economist, Mr. Raghuram Rajan, to head the Reserve
Bank of India (RBI, India’s Central Bank) in August 2013 to give
fresh impetus to efforts to revive a struggling economy and a
currency that languished at record lows. Rajan, a well-known
academic, is viewed as someone who has the intellectual
pedigree and policy experience required to fix India’s monetary
woes. Under his leadership, through a slew of proactive
measures, RBI has built up a sizeable war chest of foreign
exchange reserves that will restore confidence in the Indian
currency. From being the worst performing currency in emerging
Asia (down 14% in 2013), the Indian Rupee is already up 14%
this year as of June 30.
Reality Check
Despite all the optimism generated due to this election’s
positive results, it is important to keep firmly in mind the
challenges which Prime Minister Modi will face as he looks to
meet soaring expectations. Dealing with strong vested-interests
and bureaucracy, whose ‘buy-in’ is essential for policy
implementation, will be the bigger challenges for Modi. Also,
regional governments will remain a powerhouse in a fiercely
democratic India and will not easily play by the central
government’s wishes. Finally, the working relationship between
the Central Bank and the incoming government, the two key
architects of the prospective revival of Indian economy, need to
be collaborative and frictionless for reforms to push forward.
Central Bank independence from incoming government’s pro-
growth pressures is paramount in the resurrection of the
country’s economy, and this equation will need to be followed.
Bottom line is that an economic turnaround will be replete with
challenges, even with a stable and able government in power.
Investment Outlook
Short-Term
Any economic turnaround will take time. We should expect to
see some hiccups in the short term as the new government
takes steps to build out the infrastructure to reinvigorate the
economy, and tackle inflation and unemployment. The recent
behavior of the Indian markets is consistent with expectations
of a growth recovery, which may disappoint in the short term.
Medium-Term
The election outcome is viewed positively for the economy in
the medium term, as it should accelerate economic reforms.
The new budget reflecting changes in the banking system to
enable increased access to finance, a substantial increase in
allocation to infrastructure ministries and relaxed conditions for
allowing FDI in low cost housing, are all positive steps that will
set the stage for a steady improvement in India’s
macroeconomic fundamentals.
© 2014 Ameriprise Financial, Inc. All rights reserved. - Page 3 of 6

4. The India Story July 23, 2014
Long-Term
A strong and stable government, with its sound policy moves
and higher fiscal discipline should be able to reduce the macro
stress beyond positive market expectations. An already visible
reduction of current account deficit, plans to contain inflation
and an increased emphasis on the supply side, should be
positive for asset owners in general over the long term.
Final Thoughts
The bears on the Indian market argue that India is in a
structural downturn, and its bureaucratic red tape and balance
sheet-challenged corporations mean that any investment
revival will likely be a distant dream. But, the key positive of
having Modi at the helm of affairs is a government that delivers
and implements the policies which it formulates. The previous
government’s key failing was not poor policy but poor
implementation and execution. Modi’s key advantage lies in
superior managerial and execution ability, which will help
considerably in mitigating heightened bureaucratic risk aversion
and reversing a debilitating policy paralysis. This could
potentially resolve issues plaguing key factors of production
markets and jumpstart the weak investment cycle. Hence, we
believe that a strong government can solve a number of
impediments plaguing the Indian economy through a mix of
policy, execution and quick and decisive decision making.
About Investing in India
Given the risks inherent in investing in international markets,
and especially developing economies, we recommend investors
participate via mutual funds, exchange traded funds (ETFs), or
via managed account strategies with diversified international
exposure. Please consult with your financial advisor.
We also note that the Ameriprise Research Department
publishes two macro research reports every quarter which
investors can refer to when determining a tactical allocation
strategy involving international investments. The reports are
titled Market Strategy Viewpoint and Quarterly Capital Market
Digest. Your financial advisor can help you obtain copies of
these research reports.
© 2014 Ameriprise Financial, Inc. All rights reserved. - Page 4 of 6

5. The India Story July 23, 2014
DIRECTOR OF RESEARCH
Lyle B. Schonberger - Vice President
SENIOR ADMINISTRATIVE ASSISTANT
Annie M. Kosek
STRATEGISTS
SENIOR ECONOMIST
Russell T. Price, CFA – Vice President
SENIOR MARKET STRATEGIST
Marc A. Zabicki, CFA
EQUITY
Consumer Goods and Services
Patrick S. Diedrickson, CFA – Sr. Research Analyst
Energy/Utilities
Leze Thaqi – Sr. Research Analyst
Financial Services/REITs
Lori A. Wilking – Sr. Research Analyst
Health Care
E. Eugene Robinson – Sr. Research Analyst
Industrials/Materials
Frederick M. Schultz – Sr. Research Analyst
Technology/Telecommunication
Justin H. Burgin – Sr. Research Analyst
FIXED INCOME
Fixed Income Research
Brian M. Erickson, CFA – Director
Connie Song – Sr. Research Analyst
MANAGED ACCOUNTS, ACTIVE PORTFOLIOS, STARTING
POINT & FUNDS
Michael V. Jastrow, CFA – Vice President
Michael K. Sabbann, CFA – Director
Allocation-Oriented
Anthony M. Saglimbene – Sr. Research Analyst
Core Equity, ETFs & CEFs
Christine A. Pederson, CAIA, CIMA – Sr. Research Analyst
Growth Equity, REITs & Alternatives
Mark S. Phelps, CFA – Sr. Research Analyst
Core Taxable & Tax-Exempt Fixed Income
Jay C. Untiedt, CFA, CAIA – Sr. Research Analyst
International/Global Equity & Specialty Fixed Income
Manisha Singh – Research Analyst
Value Equity, Equity Income & Analytics
Benjamin L. Becker – Research Associate
Reporting & Analytics Support
Ameriprise Financial Services, Inc.
422 Ameriprise Financial Center
Minneapolis, MN 55474
Tel. 612.671.3131
For additional information or to locate your nearest branch office, visit ameriprise.com
© 2014 Ameriprise Financial, Inc. All rights reserved. - Page 5 of 6

6. The India Story July 23, 2014
IMPORTANT DISCLOSURES
The views expressed regarding the securities featured in this publication reflect the personal views of the Ameriprise Financial analyst(s) authoring the
publication. Further, Ameriprise Financial analyst compensation is neither directly nor indirectly related to the specific recommendations or views contained in
this publication. For important disclosures on securities mentioned in this analysis, please review available third party research reports on our website at
ameriprise.com, or through your financial advisor, or by submitting a written request to Ameriprise Financial Services, Inc., 422 Ameriprise Financial Center,
Minneapolis, MN 55474.
You should consider the investment objectives, risks, charges and expenses of mutual funds carefully before investing. For a free prospectus, which contains
this and other important information about mutual funds go to ameriprise.com. Read the prospectus carefully before you invest.
International investing involves increased risk and volatility due to political and economic instability, currency fluctuations, and differences in financial reporting
and accounting standards and oversight. Risks are particularly significant in emerging markets.
Sources: http://india.gov.in, www.tradingeconomics.com, Nomura Global Market Research, Morningstar Direct.
DISCLAIMER SECTION
Except for the historical information contained herein, certain matters in this report are forward-looking statements or projections that are dependent upon
certain risks and uncertainties, including but not limited to, such factors and considerations as general market volatility, global economic and geopolitical
impacts, fiscal and monetary policy, liquidity, the level of interest rates, and historical sector performance relationships as they relate to the business and
economic cycle. See the latest third party research reports and updates or the prospectuses for risks pertaining to a particular security.
This summary is based upon financial information and statistical data obtained from sources deemed reliable, but in no way is warranted by Ameriprise
Financial Services, Inc. as to accuracy or completeness. This is not a solicitation by Ameriprise Financial Services, Inc. of any order to buy or sell securities. This
Summary is based exclusively on an analysis of general current market conditions, rather than the suitability of a specific proposed securities transaction. We
will not advise you as to any change in figures or our views.
Past performance is no guarantee of future performance.
Ameriprise Financial Services, Inc., Member FINRA and SIPC
Investment products, including mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and
involve investment risks including possible loss of principal and fluctuation in value. Neither Ameriprise Financial, nor any of its advisors or representatives,
provides tax advice.
© 2014 Ameriprise Financial, Inc. All rights reserved. - Page 6 of 6