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27 September 2017
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| India (The Total Investment & Insurance Solutions) |
India
is expected to be a USD 6 trillion economy -- the third largest in the world --
in the next 10 years, majorly helped by digitisation, says a report.
According to global brokerage Morgan Stanley,
India's digitisation drive would provide a boost of 50-75 basis points to GDP
growth in the coming decade.
"We estimate that digitisation will
provide a boost of 50-75 basis points to GDP growth and forecast that India
will grow to USD 6 trillion economy and achieve upper-middle income status by
by 2026-27," Morgan Stanley head India research and India equity
strategist Ridham Desai told reporters here.
"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," he added.
Citing the report 'India's digital leap - The
multi-trillion dollar opportunity' released today, Desai said apart from some
short term teething problems including implementation of GST, there is scope
for visible shifts in economic activity starting in 2018 which would eventually
lead India to be the top five equity markets in the world with a market
capitalisation of USD 6.1 trillion and the third-largest listed financial
services sector around the globe with a market cap of USD 1.8 trillion by 2027.
India's consumer sectors is also likely to
add about USD 1.5 trillion over the next ten years.
"We project gross FDI inflows amounting
to USD 120 billion by FY'27, almost double the current 12-month trailing run
rate of USD 64 billion," Desai said.
Accordingly, Desai also noted that stock
markets are likely to remain robust as a stronger economic growth should drive
stronger corporate earnings growth.
Desai also said the country is also likely to
witness strong domestic participation in equities.
"We project equity saving of USD 420
billion-USD 525 billion over the next ten years, versus the respective USD 60
billion and USD 120 billion that households and foreign portfolios invested
over the previous ten years," he said.
While the report exudes confidence that
India's growth story is to continue, it also identified certain risks.
These are with respect to political
stability, privacy debate over Aadhaar, and implementation of GST, among
others.
The report said that while the Supreme Court
has made privacy a fundamental right in a recent judgement, private parties
will likely continue to question whether Aadhaar violates privacy rights.
"Any adverse judgement in the courts
could derail one of the main anchors of our framework," it said.
Further, it noted that GST is expected to
disrupt smaller businesses causing job losses and a general slowdown in
economic growth, however, it is likely to lead to lower public debt to GDP
subsequently.The Total Investment &
Insurance Solutions
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