india-s-economy-shows-resurgence-echoing-2000s-boom-driven-by-investment

India's economy is experiencing a robust expansion driven primarily by investment, say economists at Morgan Stanley. This resurgence mirrors a period when growth averaged over 8%, igniting optimism about the nation's economic trajectory.

 

According to Morgan Stanley economists, including Chetan Ahya, India's current growth trajectory closely resembles that of the mid-2000s, marked by sustained expansion averaging more than 8% annually.

 

They emphasize that investment has emerged as a pivotal force propelling the Indian economy forward, indicating potential for further expansion.

 

After a decade-long slump, India's investment as a percentage of gross domestic product (GDP) is steadily climbing, poised to reach 36% by 2027 from a recent low of 28% in 2021. This upward trend mirrors the period from 2003 to 2007 when India's investment ratio surged to 39%. "We see a long runway ahead for the current expansion cycle," assert the economists.

 

India, renowned as the world's fastest-growing major economy, showcased a remarkable growth rate of 8.4% in the final quarter of the previous year.

 

However, concerns about the sustainability of this growth path were raised as a more representative measure, stripping out one-off items, hinted at a slowdown.

 

Economists at Societe Generale also echoed sentiments regarding investment being a primary growth driver for India's economy. They noted early signs of a resurgence in private capital expenditure, indicating that investment is diversifying beyond public spending.

 

India's top economic adviser highlighted sustained signs of capital formation, hinting at the potential for the economy to expand by over 7% in the fiscal year beginning in April.

 

The investment boom has not only driven economic growth but also lifted key stocks. The S&P BSE Industrials Index, housing manufacturers of critical infrastructure components such as bridges, helicopters, and wind turbines, has surged over 71% in the past year. This surge has propelled the collective market value of its more than 200 members by over $175 billion.