.jpeg)
Morgan Stanley's Managing Director and Chief India Equity Strategist Ridham Desai says India's economic foundation is solid, but the real threats to its growth lie outside its borders.
Speaking at the Business Standard BFSI Summit, Desai said that while corporate and household balance sheets are healthy and reforms are delivering momentum, the world is sitting on record debt, facing demographic decline, and shifting geopolitically in unpredictable ways.
"Lots of things can go wrong," Desai said when can go wrong for India. "Most of the things that can go wrong for India are outside India's control - and that makes matters worse for us because when things are in your control, you can fix them in advance."
He argued that India's domestic fundamentals remain sound. "Our corporate balance sheets are very pristine. I disagree with the common narrative that the household balance sheet is stretched. Far from it, it is not. It is actually quite okay. So there's no problem on the balance sheet," he said.
India, he added, also enjoys a strong reform tailwind. "In India, there's such low-hanging fruit. We just have to stretch our hand and pluck it, and suddenly you will get an unleashing of growth opportunity," he said. "We don't have to do some earth-shattering legislation. These are very easy steps to take — and we are taking them right now."
But beyond India's borders, Desai warned of deeper structural challenges. "The world is sitting on record debt and is aging, and that's not a pretty combination," he said. "I kind of agree with Elon Musk when he says that the world has a population problem which is much larger than climate change, because we as a race have not really figured out how to reverse a declining population."
He described India's population as the country's "biggest moat" in a world where consumption is key. "The world talks about robots, but robots don't wear clothes. They don't drive cars. They don't eat food. They don't take vacations. They are not consumers. And if robots start running our factories, who are they going to make things for? They're going to make things for human beings. And this country has more human beings than anywhere else on the planet."
That, he said, explains why multinational corporations are drawn to India. "Some of them will put FDI and say I need a factory in India. Some of them will not do that — later on, I think they will change their view," he said. "Our estimate at Morgan Stanley is that for the next 10–15–20 years, India will be one-fifth of global growth — 20%. Depending on what product or service you sell, India could account for between 10 and 100% of your revenue growth. If you're not in India, good luck to you."
Desai also warned of geopolitical challenges, saying India's immediate environment remains "harsh." "We don't choose our neighbors, but most of our neighbors are either bankrupt — both politically as well as financially — or at least bankrupt in one form or the other. So that always threatens India in some way or the other, and will have to be addressed," he said.
Domestically, Desai identified the farm sector as India's biggest unfinished agenda. "We have approximately 200 million farmers, and the farm reforms that were proposed a few years ago were extremely bright and necessary. We need to lift our farmers out of poverty; otherwise, what will happen is the remaining 1.1 billion people who don't depend on farming will race ahead, and these 400 million people who get left behind will become a problem for society," he said.
Desai said India's 350 million acres of farmland — nearly half the country's area — holds massive potential. "Nowhere on the planet, does any large country have 50% under agriculture. If we operated at Chinese levels of productivity, I reckon that our farm economy could be $2 trillion. We could end up feeding half the world with that — that's the potential of our farm sector, but it needs to be unlocked."
Concluding his remarks, Desai said India's macro position is resilient, but global risks could test that strength. "India is fine, but the world is aging, the world has indebtedness, and at some point in time in the next few years, this will unfold in the form of a crisis," he said.
