Rama Krishna Sangem
Indian economy may grow at 8 per cent and above just like in 2008 from now on, the golden period of growth. Investment has become a major driver of India’s booming economy, according to economists at Morgan Stanley, adding that the country’s current expansion resembles that of the mid-2000s when growth averaged more than 8 per cent, says a Bloomberg story.
The economists also said the economy appears to have room for even further expansion, given the path for additional capital expenditure — especially from private businesses — rising exports and a more stable economy.
After declining for a decade, India’s investment as a percentage of gross domestic product is steadily climbing and could reach 36 per cent by 2027 from a recent low of 28 per cent in 2021, economists including Chetan Ahya wrote in a note Tuesday. The upswing mirrors the period from 2003-2007, when India’s investment ratio rose to 39 per cent, they said.
“We see a long runway ahead for the current expansion cycle,” the economists said.
Private expenditure picks up
India, the world’s fastest-growing major economy, logged a blowout growth rate of 8.4 per cent in the final three months of last year. However, a more representative measure of growth that stripped out one-off items showed a slowdown, raising questions about the sustainability of India’s growth path.
On March 12, Monday, economists at Societe Generale also wrote that investment remains a major growth driver for India’s economy. They added that they see early signs of a revival in private capital expenditure, signaling that investment appears to be expanding beyond just public capex.
Separately, India’s top economic adviser said Wednesday there were sustained signs of capital formation that may help the economy expand more than 7 per cent in the fiscal year beginning in April.
The investment drive has lifted key stocks. The S&P BSE Industrials Index, which includes manufacturers of bridges, helicopters, and wind turbines, has risen over 71 per cent in the past year, increasing the collective market value of its more than 200 members by more than $175 billion
