Morgan Stanley predicted that a shift in policy focus to boost investment, demographics and public digital infrastructure would make India the world's third-largest economy by 2027.
Chetan Ahya, chief Asian economist at Morgan Stanley, wrote in the Financial Times that India will double its gross domestic product (GDP) from $3.4 trillion today to $8.5 trillion in the next ten years.
He further said that India's GDP will grow from $3.4 trillion today to $8.5 trillion in the next 10 years.
“India will gradually add more than $400 billion to its GDP each year, a measure second only to the United States and China,” Chetan Ahya, chief Asian economist at Morgan Stanley, wrote in the Financial Times.
He said the confluence of favorable local and global forces supports the projection, highlighting the shift in policy focus from redistribution to investment promotion and job creation.
He cited tax reforms in the form of the Goods and Services Tax (GST), the reduction of the corporate tax rate and the introduction of production-linked incentive schemes as examples of changes in government policy.
He said that in a multipolar world where companies are diversifying their supply chains, India is emerging as a preferred destination.
"India is entering a phase where revenue will double at a rapid rate from a high base. For context, it has taken India 31 years since 1991 to increase its GDP by $3 trillion. According to our forecasts, it will only take another seven years GDP will grow by an additional $3 trillion.
He also set India apart from other economies on the digital infrastructure front. India has built a public digital infrastructure based on Aadhaar, while other economies have gone the private network route.
He said additional layers are being built that will take advantage of this digital infrastructure to better bring consumers and businesses together and lower the cost of doing business.
In this regard, he cited the example of Open Network Digital Commerce (ONDC), which is described as the equivalent of a UPI (Unified Payment Interface) in electronic commerce.
Ahia noted that "India's shift in policy focus brings it closer to the East Asian model of profiting from exports, increasing savings and recycling to invest."
Citing the example of China, he said India's GDP today is that of China's in 2007, with a gap of 15 years.
But he added that India's working-age population is increasing, indicating it will have a longer growth trajectory. The average life expectancy in India today is 11 years less than that of China.
India's productivity growth differentials are also favourable. "Taken together, we think this means India's real GDP growth will average 6.5 percent over the next decade, while China's will average 3.6 percent."
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