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India is poised to grow at 6.2 per cent in the current financial year 2023-24 with improving macro stability indicating that the monetary policy will not have to turn restrictive, Morgan Stanley has said.
In a report titled "Asia Economics: The Viewpoint: Addressing the Pushback to Our Constructive View", authored by Chetan Ahya, Derrick Y Kam, Qiusha Peng, and Jonathan Cheung, Morgan Stanley said India enjoys tailwinds -- both cyclical and structurally. "We see healthy balance sheets sustaining the robust trends in domestic demand. Improving macro stability means the monetary policy will not have to turn restrictive, allowing the economic expansion to continue," the report said. In the three-day deliberations of the Monetary Policy Committee of the Reserve Bank of India in early April, Governor Shaktikanta Das said the central bank has projected India's real GDP growth for 2023-24 at 6.5 per cent. Late last year, investors had raised concerns over India's growth momentum as growth indicators had slowed post the festive season in October. However, growth indicators reaccelerated in early 2023. For instance, the services Purchasing Managers' Index is at a 13-year high and the manufacturing PMI is near an 11-year high, both well above that of other economies; passenger vehicle sales are at 131 per cent of pre-covid levels, real goods and services tax collections are 35 per cent higher than pre-covid. Against those thriving fundamentals, Morgan Stanley's chief India economist Upasana Chachra expects GDP growth of 6.2 per cent for 2023-24, higher than the wide expectation of 5.8 per cent. Further, clearing doubts about India's rural spending, the Morgan Stanley report said it is of the view rural spending will strengthen. "As we noted previously, it is the case that rural and lower-income consumers are taking longer to revive spending as they have not received stimulus, and they had suffered a loss of purchasing power as inflation rose. But, as these effects fade, spending by rural and lower-income consumers is recovering. Indeed, real agricultural credit growth - a proxy for rural activity - has rebounded to the highest level since 2016, boding well for rural employment and consumption," the report read. (ANI)
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