INDIA: Investors’ ongoing pursuit of the “big thing” would be the one constant in the volatile world of investment. A candid investor won’t hesitate to admit the hype surrounding China’s majority of fundraising roadshows.
Over the next ten years, while the US and China will continue to be significant to international investors, we believe that India’s economy will become more visible on their radars due to its growth, Morgan Stanley’s chief economist for Asia, Chetan Ahya, said.
Indian stocks appear ready to increase their lead over global peers and close 2022 on a high note after emerging as a safe haven during this year’s global equity slump.
Foreign investors are starting to return, which is supporting the market. On Friday, the benchmark S&P BSE Sensex Index reached a record high as risk assets celebrated a softer US inflation print.
India has been able to decouple from other emerging economies because of an extraordinary surge in retail investing, robust domestic demand that has allowed for one of the fastest growth rates in the world, and political stability.
“The key lies in the size and scale of India’s opportunity set,” said Ahya. India’s GDP is expected to more than double from its present level of $3.4 trillion to $8.5 trillion over the next 10 years, making it the world’s third-largest economy by 2027, according to Ahya.
India will gradually increase its GDP by more than $400 billion annually, a level only topped by the US and China.
By 2032, India’s market capitalization, currently at $3.4 trillion, will climb to $11 trillion, making it the third-largest country in the world, as estimated by Morgan Stanley employee Ridham Desai.
A network of favourable domestic and international factors backs up these expectations. The shift in policy’s emphasis from redistribution to encouraging investment and employment development is the most major domestic change.
This was made clear by the implementation of the GST, which unifies the domestic market, by corporate tax reductions, and by production-linked investment incentive programmes.
Overlaying this is the advent of a multipolar world in which businesses are diversifying their supply chains, with India rising as a preferred location.
As per Morgan Stanley, these factors will help integrate India’s rapidly expanding labour force into the global economy.
In order to increase industrial exports, India is currently undertaking significant attempts to attract investment. These brand-new workplaces around the globe will increase employment in the formal sector and, more importantly, accelerate productivity growth, resulting in a positive feedback loop of long-term growth.
India’s policy direction is changing, and this is bringing it closer to the East Asian model of leveraging exports, increasing savings, and repurposing savings for investment.
India is entering an era where revenues will be compounding quickly on a high base against this backdrop. Over the next ten years, China’s real GDP growth will average 3.6%, whereas India’s will average 6.5%.
India is paving the way and taking a creative approach to development in this field, as a digital infrastructure may be just as important in today’s world as a physical one.
In contrast to other economies where private networks have taken root, India has been at the forefront of developing public digital infrastructure on a global scale. Based on the unique digital identity system for the nation, Aadhaar was created.
Additional layers are being built to make use of this digital infrastructure in order to improve consumer and business matching, simplify transactions, and reduce operating expenses.
For instance, conducting business online is made simpler for buyers and sellers thanks to the open network for digital commerce established by the government.
India recently overtook the UK to assume fifth place in the global economic rankings. A recent analysis predicts that in the fiscal year 2023, the gross domestic product will increase by 7.0%.
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