Morgan Stanley s report suggests India s current economic surge resembles the mid-2000s, foreseeing a continuing investment-driven cycle. Noting high investment-to-GDP ratios, it projects a rise to 36% by FY27. Urban demand surpassing rural, reminiscent of the 2003-07 cycle, is expected to continue. India s global market share in goods and services, particularly in exports, mirrors growth seen in the mid-2000s.
Indias capex cycle is expected to continue its run, with the current uptick resembling the 2003-07 period when growth averaged 8.6%, Morgan Stanley said.
The Reserve Bank of India (RBI) has stated in its monthly bulletin that the Indian economy is sustaining the momentum achieved in the first half of the current financial year. RBI Governor Shaktikanta Das noted that the investment cycle in India is gaining steam, driven by sustained government capex, rising capacity utilisation, increased flow of resources to the commercial sector, and policy support from schemes like the production-linked incentive (PLI scheme).
The surge is driven by a substantial focus on infrastructure development by several state governments. Here is the list of the top 10 states with the highest CAPEX spending in the last five years.
“The pick-up in capex spending will likely become more broad-based. While public capex will likely stabilise on stretched government finances, we expect private corporate capex and residential housing demand to continue to improve,” said Tanvee Gupta Jain, chief India economist, UBS Securities.