What's New :
Organize your integrated preparation with Minimum Input & Maximum Output. Register here...

Why the world is bullish about the Indian economy?

  • Published
    21st Nov, 2022

A recent report by Morgan Stanley expects that India’s GDP is likely to surpass $7.5 trillion by 2031, making it the third-largest economy in the world.

Morgan Stanley (MS) Report:
  • Morgan Stanley (MS), report titled “Why this is India’s decade”, states that “four global trends imply that India is set to become the third-largest economy within the coming decade due to:
    • Demographics
    • Digitalization
    • Decarbonization
    • Deglobalization
  • India’s GDP is likely to surpass $5 trillion by 2031, more than double current levels.
  • India’s per-capita income is expected to rise from $2,278 now to $5,242 in 2031, setting the stage for a discretionary spending boom.
  • The number of households earning more than $35,000/year is likely to rise fivefold in the coming decade, to over 25 million.
What will trigger this rise?
  • Off-shoring: In the post-Covid environment, global CEOs appear more comfortable with both working from home and working from India.
  • In the coming decade, the number of people employed in India for jobs outside the country is likely to at least double to over 11 million.
  • The all-time high MNC Sentiment Index shows, that Multinationals are more optimistic than ever about investing in India.
  • Digital differentiation: IndiaStack, which operates at a population scale, is a transaction-led, low-cost, high-volume, small-ticket-size system with embedded lending that will take India from a ‘prepaid’ economy to a ‘postpaid’ (buy now, pay later) one.

    India Stack is a set of application programming interfaces (APIs) that allows governments, businesses, startups, and developers to utilize a unique digital Infrastructure to solve India’s hard problems towards presence-less, paperless, and cashless service delivery.
  • Energy transition: Energy is a key to economic development, as it impacts education, productivity, communication, commerce, and quality of life.
    • India’s energy needs are still growing, and therefore legacy capacity using fossil fuels will not be destroyed as it transitions to a higher share of renewables.
    • All of India’s 600,000-plus villages have access to electricity, due to recent upgrades to transmission and distribution, among other changes.
What are the risks to these projections?
  • Prolonged global recession or sluggish growth
  • Adverse geopolitical developments
  • Domestic politics and policy errors
  • Shortages of skilled labor
  • Steep rises in energy and commodity prices
Investing In the India Decade:

 The country gives investors a plethora of compelling reasons to invest in India.

  • The largest youth population in the world
  • Huge domestic market
  • Flourishing economy
  • Diverse sectors
  • Governance
  • Thriving infrastructure
Other reports favoring India's growth:

National Bureau of Economic Research (NBER): It publishes a paper titled: “The future of global economic power”. It has used the UN’s demographic data and IMF economic data to predict:

  • China and India will become the world’s top two economies.
  • The share of the US and Western Europe will shrink to just 12.3 percent and 11.9 percent, respectively.
  • productivity growth and its interaction with demographic change are going to be the main drivers of future economic power.
  • If recent productivity continues and demographic projections prove accurate, India will account for one-third of world output in 2100 and China for over one-fifth.
GS Mains Classes GS Classes 2024 UPSC Study Material

Verifying, please be patient.

Enquire Now