Morgan Stanley, has predicted a substantial 15.3% Compound Annual Growth Rate (CAGR) in infrastructure investments in India over the next five years.
This projection points to a cumulative expenditure of USD 1.45 trillion, signaling a significant boost to the country’s investment rate and fostering a prolonged period of high productive growth.
In its recent publication titled The New India - Infrastructure, Morgan Stanley emphasized the pivotal role of infrastructure investment in economic development. The report highlights India’s increased focus on infrastructure over the past decade, coupled with efforts to enhance productivity.
Despite these strides, the report suggests there is ample opportunity for further growth in both scale and efficiency.
Morgan Stanley stressed on the potential impact of the Prime Minister Gati Shakti initiative, also known as the National Master Plan for Multi-modal Connectivity.
This initiative is expected to accelerate infrastructure project execution while mitigating cost overruns. The streamlined approach aims to unlock productivity gains and improve overall efficiency in project delivery.
The surge in infrastructure spending is anticipated to bring about several macroeconomic benefits, according to the report:
1. Profit Boom: Increased capital expenditures (capex) could drive a profit surge across sectors.
2. Macroeconomic Stability: Enhanced infrastructure is likely to contribute to greater economic stability.
3. Efficiency and Productivity: Improved infrastructure can lead to higher efficiency and productivity gains.
4. Sustained Growth: The overall effect is expected to foster sustained economic growth over the medium to long term.
Acknowledging the broader market implications, Morgan Stanley highlighted positive outcomes for equity markets.
Enablers, developers (asset owners), and adopters are set to benefit from the robust infrastructure growth anticipated in the coming years.
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