India to Become Third Largest Economy, Stock Market by 2030, says Morgan Stanley


India is set to become the third-largest economy and stock market in the world by the end of this decade, with the GDP likely to cross 7.5 trillion dollars by 2031, which is more than double the current level, according to US banking group Morgan Stanley. According to Morgan Stanley, India is gaining more power in the world economy, and in their opinion, these changes imply a once-in-a-generation shift, and an opportunity for investors and companies.

According to Morgan Stanley, the number of households with earnings in excess of 35,000 dollars a year is likely to increase five times in the upcoming decade, to more than 25 million dollars. The implications are that GDP is likely to cross 7.5 trillion dollars by 2031, and the 11 percent annual compounding of market capitalization will reach 10 trillion dollars in the upcoming decade.

The implications include an increase in credit to GDP from 57 percent to 100 percent, with greater insurance penetration, better healthcare services, and an increase in stock market investors from 62 million to around 300 million; stocks and a material increase in consumer discretionary spending.

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Morgan Stanley estimates that production share of GDP will increase from 15.6 percent to 21 percent in 2031, which implies a jump in nominal output jumping from 447 billion dollars to around 1.49 trillion dollars.

Morgan Stanley expects the ratio to remain relatively high in India, and private consumption of in India will more than double to 4.5 trillion dollars by the end of 2030, which was similar in size to China in 2015.