As per Morgan Stanley forecast, India’s size and scale is one of its key assets which will enable it to become the third largest economy in the world by 2027.
Morgan Stanley has said in its report that the country’s GDP will increase from its current $3.4 trillion to $8.5 trillion in the next ten years.
According to the report, “India will add more than $400 billion to its GDP every year, a scale that is surpassed only by the US and China.” It also estimates that India’s market capitalization will increase from $3.4 trillion to $11 trillion by 2032, the third largest globally.
However, these projections are aligned with favorable domestic and global forces. At the domestic level, it is important to shift the policy approach away from redistribution and towards promoting investment and job creation.
“This was evident in the introduction of the Goods and Services Tax which creates a unified domestic market; reductions in corporate tax; and production-linked schemes to encourage investment from both within and outside India’s borders,” says Morgan Stanley. .
“These forces will integrate India’s rapidly growing workforce into the global economy. As it is, India already has a high global market share in services exports, and its growth has only increased since the start of the pandemic as Corporates have become more accustomed to remote work,” further added.
According to Morgan Stanley estimates, it would take just seven years to add an additional $3 trillion to GDP.
“China’s experience provides a useful template in terms of how important this development will be to global investors. India’s GDP today is where China was in 2007 – a 15-year gap,” it said.
India’s working age population is still growing, which shows that it will have a long runway for growth. Today the average age of India is 11 years less than that of China.
India’s real GDP growth will average 6.5 percent in the coming decade, while China’s average will be 3.6 percent.
China’s industrialization drive, which has driven much of its growth over the past 30 years, enabled infrastructure such as roads and railways, with India now making concerted efforts to increase public expenditure on infrastructure.
In other economies of the world where private networks have become stronger, India has built its public digital infrastructure with Aadhaar, which enables it to better match consumers and businesses, facilitate transactions and reduce the cost of doing business. Can take advantage of digital infrastructure.
“We estimate that India is set to drive one-fifth of global growth in the coming decade. We feel this provides an attractive opportunity for multinationals and global investors in a growth-hungry world.”