india-can-t-achieve-china-s-past-8-10-growth-morgan-stanley-says

In a recent statement to Bloomberg, Morgan Stanley's chief Asia economist, Chetan Ahya, expressed skepticism about India's potential to replicate China's remarkable economic growth rates. Ahya indicated that while India's economy is expected to grow steadily, it is unlikely to reach the soaring heights experienced by China over the long term.

 

Contrary to China's remarkable average growth of 10% annually for three decades following its economic reforms in 1978, India's growth trajectory is projected to hover between 6.5% and 7% over an extended period.

 

Ahya highlighted the challenges that are hindering India's progress, particularly citing deficiencies in infrastructure and a shortage of skilled labor as significant barriers.

 

Ahya emphasized that these limitations are likely to keep India's growth robust but at a more moderate pace compared to China's meteoric rise. He explained, "Both these constraints make us believe that India’s growth is going to be strong, but at 6.5%-7% rather than 8%-10%."

 

Despite these challenges, Morgan Stanley maintains an optimistic outlook on India's economic future.

 

A recent report by the investment bank, titled 'The Viewpoint: India - Why this feels like 2003-07', drew parallels between the current economic expansion in India and the boom experienced in the mid-2000s, fueled by a surge in investment.

 

Ahya also pointed out India's increasing prominence on the global stage, as evidenced by rising capital flows and a growing share of global foreign direct investment. However, he cautioned against expecting India to swiftly replace China or emerge as a dominant player in manufacturing.

 

Highlighting China's advanced manufacturing capabilities and its ventures into emerging sectors like renewable energy and space technology, Ahya suggested that India would require time to achieve similar levels of competitiveness.