The latest research conducted by Morgan Stanley leads them to believe that India’s economy will reach a valuation of $5 trillion by the year 2025. Per capita income also expected to increase by 125%.
The report says that India’s economy faces a massive disruption from its huge millennial population. This demographic, along with the Indian government’s policy action and globalisation, will combine to propel the economy to $5 trillion in another 8 years.
By 2025, Morgan Stanley also expects India’s per capita income to rise 125% to $3,650. Currently, India’s per capita income is languishing at $1,700, well behind economic competitors like China, Brazil, Russia, the Philippines, Indonesia, Turkey and Mexico.
Currently, The Indian economy is the seventh largest in the world with $2.2 trillion in terms of nominal Gross domestic product (GDP). It is also the third largest in terms of Purchasing Power Parity (PPP).
Morgan Stanley has published several reports in the past 6 months focussing on different aspects of the economy that can lead to this growth. Of these factors, the strongest points in favour of the Indian economy are India’s millennial population of 400 million, the largest in the world, armed with around $180 billion in spending power.
Other contributing factors are high smartphone penetration and availability of mobile broadband infrastructure . Morgan Stanley held out hope that these factors in the medium term will become a disruptive force strong enough to lead to a continued period of productive growth.
Although Morgan Stanley predicts that the population dynamics will play a crucial role in shaping India’s growth path, it also admits that it is not the solely sufficient factor for an accelerated GDP. The job skills of the working age demographic will also determine the growth trajectory in an extremely competitive global market.
The need of the moment is to tap into the potential of its youth and develop their skills. This means creating sufficient employment opportunities, which will both be a challenge and an opportunity for India.