India's GDP to hit $6 trillion by 2027 on digital push: Morgan Stanley
03 October 2017
India is likely to be the world's fastest-growing large economy in the next 10 years, driven by digitisation, favourable demographics, globalisation and reforms, financial services major Morgan Stanley said in a report.
According to Morgan Stanley, the trend line in India's annual GDP growth has been accelerating to 6.9 per cent in 2000s, from 5.8 per cent in the 1990s, and this momentum is likely to continue in the next decade as well.
Digitisation will provide a 50-75 bps boost to GDP growth in India, helping it to grow into a $6-trillion economy and achieve upper-middle income status by 2026-27, says the report.
And, despite the recent aberration of GDP growth slipping to a three-year low of 5.7 per cent in April-June - the third straight quarterly fall- amid a slowdown in manufacturing activities, Morgan Stanley expects India to emerge stronger as the economy gets over the teething troubles with the goods and services tax and the side effects of last year's demonetisation drive.
According to the report, the reforms over the past year have created disruption in India's GDP numbers, but that has boosted the medium term growth potential of the country.
"We expect India's real and nominal GDP growth to compound annually by 7.1 percent and 11.2 percent, respectively, over the coming decade," Morgan Stanley said in a research note.
Morgan Stanley expects the inflows of FDI into the country to top $120 billion by 2026-27, almost double the current l3evel of $64 billion.
The report noted that the impact of higher GDP growth is expected to get reflected in corporate earnings momentum.
"We think India's stock market could be among the world's best performers in the next 10 years, leading to India's market cap rising from around USD 2 trillion to around USD 6 trillion," the report stated.