Echoing the vibrancy of India's economic boom during the mid-2000s, a recent report by Morgan Stanley highlights striking parallels between then and now, attributing the current surge to a strong investment trajectory.
Economists at Morgan Stanley highlight the resemblance between India's current growth cycle and the period from 2003 to 2007, characterised by an investment-driven expansion that propelled the economy to impressive heights.
The report indicates the vital role of investment as a primary driver of India's economic resurgence, mirroring the trajectory witnessed during the mid-2000s.
Notably, India's gross fixed capital formation has surged, signalling a sustained upswing in investment activity after a decade-long decline.
The investment ratio, which plummeted to 28 per cent in 2021, is projected to climb to 36 per cent by 2027, indicating the buoyancy of India's economic landscape.
According to Bloomberg, Morgan Stanley economists project a promising trajectory for India's investment cycle, brought by the prospects of robust capital expenditure, burgeoning exports, and enhanced macroeconomic stability.
Despite concerns about sustainability, the report posits that India's current growth trajectory exhibits resilience, with ample scope for further expansion driven by private sector participation and rising exports.
WION
The Economic Times
ANI VideoIndia's status as the world's fastest-growing major economy is strengthened by its investment-led growth narrative, as highlighted by top economic advisers.
Anticipating sustained capital formation, economists foresee India's economy expanding by over 7 per cent in the fiscal year commencing in April, fostering optimism amidst evolving global economic dynamics.
The surge in investment activity has not only bolstered economic fundamentals but has also catalysed significant market movements.
Key indices such as the S&P BSE Industrials Index have witnessed substantial gains, reflecting investor confidence in India's burgeoning industrial landscape.
Amidst growing investor optimism, the collective market value of industrial players has surged, signalling robust growth prospects in key sectors.
While India's current economic trajectory bears semblance to the resplendent growth witnessed in the mid-2000s, analysts have also issued caution against potential impediments that could impede the growth momentum.
Labour shortages and logistical bottlenecks pose challenges to sustaining the growth cycle, warranting proactive measures to address emerging constraints.
Nonetheless, Morgan Stanley remains optimistic about India's macroeconomic outlook, citing the enduring resilience of the investment-driven growth model.
(With inputs from Bloomberg)