New Delhi: A report by financial services company Morgan Stanley has found that India has “transformed” over the past decade on a wide range of economic metrics including supply-side reforms, formalization of the economy, real estate regulations and social sector devolution. ,
“We are in significant skepticism about India, especially with foreign investors who say that India has not performed to its potential (despite it being the second fastest growing economy and the top performer in the last 25 years) performing stock markets) and that equity valuations are very rich,” said the report released on Monday.
It added: “However, such a view ignores the significant changes that have taken place in India, especially since 2014.”
Based on its analysis, Morgan Stanley made some predictions about the Indian economy, both domestically and also with respect to its relationship with the global economy.
“We expect a new cycle in manufacturing and capex [capital expenditure]As we estimate that the share of both in GDP will increase [gross domestic product] by about 5 percentage points by 2031,” the report said. “We estimate that India’s export market share will increase to 4.5 per cent by 2031, nearly 2 times [double] from the 2021 level with wide-ranging gains in exports of goods and services.”
Specifically, the report states that, as India’s dependence on global capital market flows decreases, the sensitivity of the stock market to events such as a recession in the US, or rate changes by the US Federal Reserve, appears to be decreasing. Is.
Risks to India’s overall growth story, Morgan Stanley said, were a global recession, a “fractured general election result in 2024”, a sharp rise in commodity prices due to supply constraints and a shortfall in skilled labor supply.
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change since 2014
Talking about the changes in the Indian economy since 2014, the report pointed out that on the supply side, after reductions implemented by the government in 2019, India’s corporate tax rate is “at par with competitors” such as China, Indonesia Was. , South Korea, Malaysia, Japan, Thailand, Vietnam and Singapore, among others.
The report also pointed out that the pace of infrastructure construction has accelerated in the last eight years as compared to the previous eight years. For example, the Morgan Stanley report states that 53,700 km of national highways were built between 2014-15 and 2022-23, which is significantly higher than the 25,700 km built in the period 2005-06 to 2013-14.
Similarly, it shows that the broadband subscriber base had increased by 771.3 million people during the last eight years, as against 58.9 million in the previous eight years.
A total of 95.7 gigawatts (GW) of renewable energy capacity was installed in the country between 2014-15 and 2022-23, while an incremental 25.7 GW was installed between 2005-06 and 2013-14.
With regard to the formalization of the economy, Morgan Stanley pointed to a steady increase in tax collections under the Goods and Services Tax (GST), and also pointed out that digital transactions as a percentage of GDP are projected to increase to 76.1 percent in 2022 – 23, from only 4.4 per cent in 2015-16.
Data from Morgan Stanley also shows that reforms such as the Real Estate (Regulation and Development) Act, 2016 have given a big boost to the real estate sector, with both new launches and new property sales rising to 75,000 units and 60,000 units, respectively. Has been First quarter of 2022-23. This is compared to around 50,000 new launches and 41,000 new sales in the second quarter of 2014-15.
On social transfers, Morgan Stanley did not provide granular data, but instead showed a graphical trend, showing that although the number of cash transfers and in-kind transfer schemes have decreased, the actual amount of cash and goods transferred to those in need has increased manifold. Gone are the last 10 years.
The report further states that, as India’s per capita income is projected to increase from $2,200 at present to around $5,200 by 2031-32, there will be “major effects of change” in the consumption basket, with pressure for discretionary consumption .
“Driven by supply-side reforms by the government, we expect a larger increase in investment, a narrowing of the current account deficit and an increase in credit to GDP to support the coming profit growth,” the report said. “
(Edited by Poulomi Banerjee)
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