India, under Prime Minister Narendra Modi, has transformed, gaining a position in the world order and becoming a key driver for Asia and global growth, said a new Morgan Stanley report.
India has made some strides especially in manufacturing since 2014, according to the report.
India of today, the report said, is different from what it was in 2013.
‘This India is different from what it was in 2013. In a short span of 10 years, India has gained positions in the world order with significant positive consequences for the macro and market outlook,’ the report observed about the country’s transformation in the last decade.
Even so, India’s GDP growth for FY23 is at 7.2 % down from 9.1% in FY 2022. Q4 2023 growth is higher at 6.1% as opposed to 4.4 % in Q4 2022. The National Statistical Office (NSO), under the ministry of Statistics and Programme Implementation, announced that the GDP in the last quarter of the financial year 2022-23 is estimated at INR 43.62 lakh crore, as against INR 41.12 lakh crore in the previous year’s final quarter.
According to senior economists, sustained GDP growth would require increased investments and while the numbers do bode well for India, there has also been a reduction in input costs as India tackles rising unemployment and workers going away from the workforce.
In the March quarter, India’s manufacturing sector output rose 4.5% on-year, compared to 1.1% contraction in the previous quarter while farm output rose 5.5% compared to 3.7% growth in the same period, according to reports by Reuters and PTI agency updates.
Transfer of subsidies to accounts of beneficiaries, insolvency and bankruptcy code, flexible inflation targeting, focus on FDI, government support for corporate profits, a new law for real estate sector and MNC sentiment at multi-year high were other significant changes, according to Morgan Stanley.
Supply-side policy reforms, formalization of the economy, Direct Benefit Transfer, Insolvency and Bankruptcy Code, focus on FDI and flexible inflation targeting have been good policy choices, resulting in positive implications for India’s economy and market.
The report also estimates that India’s export market share will rise to 4.5 per cent by 2031, nearly 2 times from 2021 levels, with broad gains across goods and services exports.
‘As India’s per capita income increases from USD 2,200 currently to about USD 5,200 by F2032, this will have major implications for change in the consumption basket, with an impetus to discretionary consumption,’ it added..
India has also become the global leader in digital transactions and real-time payments.
The country’s reliance on global capital market flows has also reduced as the Indian market’s sensitivity to US Fed rate changes due to recession fears also seems to be fading, it added.
The report said, a global recession, 2024 elections leading to fragmented politics, commodity price rise and skilled labour supply are key risks to India’s growth.
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