The per capita income levels in India may be languishing as on date, but it set for a rebound, according to the latest estimates of Morgan Stanley. The global firm expects India’s per capita income to rise to $4,135 by 2027. With a per capita income of $1,702, India ranks well behind some of the key emerging markets, like China, Russia, Brazil, Indonesia, the Philippines, Mexico, and Turkey. This will also propel India’s position to a middle-income country. “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 economies and achieve upper-middle income status by 2026-27,” Ridham Desai head, India Research Head at Morgan Stanley said.
Earlier in February this year, Morgan Stanley had outlined factors in favour of India, which are set to bolster growth. “We expect a confluence of supportive factors, led by demographics, government policy action, and globalisation, to lead to a sustained period of productive growth in the medium term.” the firm said in a research note.
The report had said that India’s millennial population of 400 million is the largest in the world and is armed with around $180 billion in spending power, and with high smartphone adoption and widespread availability of mobile broadband infrastructure, it will become a disruptive force faster than most businesses expect.
“The population dynamics will therefore be a key force in shaping India’s overall growth trajectory and also in shaping how product markets will develop as the preferences of the population evolve,” Morgan Stanley said.
In its latest report, Morgan Stanley estimated that India’s real and nominal GDP growth will grow annually by 7.1% and 11.2% over the coming decade. Not just the GDP, Morgan Stanley also estimates benchmark Sensex to cross the 1 lakh-mark by 2028. According to Ridham Desai, Indian stock markets are likely to remain robust as a stronger economic growth should drive stronger corporate earnings growth. The global brokerage firm noted that 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 $6.1 trillion, and the third-largest listed financial services sector around the globe with a market cap of $1.8 trillion by 2027.