Capex emerges as India's key growth driver: Morgan Stanley

"We think the capex cycle has more room to run; therefore, the current expansion closely resembles that of 2003-07,” economists at the financial services company said in the report, titled 'The Viewpoint: India—Why this feels like 2003-07’.

The present cycle is driven by investment outperforming consumption, public capex leading initially but private capex rapidly catching up, the urban consumer leading consumption followed by catch-up in rural demand, a rising market share in global exports and macro stability risks kept under control, they noted.

The country’s world-beating economic growth rate on the back of an investment boom now resembles that of 2003-07 when growth averaged more than 8 per cent, they were cited as saying by a news agency.

The investment-to-GDP ratio was close to the peak in fiscal 2007-08, then hovered around those levels until it peaked in fiscal 2010-11. It witnessed a decline from 2011 to 2021, but has now inflected again to 34 per cent of GDP and Morgan Stanley expects it to rise further to 36 per cent of GDP in 2027.

ALCHEMPro News Desk (DS)