India has transformed in less than a decade, gaining positions in the world order with significantly positive consequences for the macro and market outlook, Morgan Stanley said in a report.

The report, India Equity Strategy and Economics: How India Has Transformed in Less than a decade, highlighted the 10 big changes, mostly because of India’s policy choices, and their implications for its economy and market.

“This India is different from what it was in 2013. In a short span of 10 years, India has gained positions in the world order with significant positive consequences for the macro and market outlook. We present a snapshot of these changes and their implications,” the report said.

The report predicted that India will emerge as a key driver for Asia and global growth.

It further said, “We run into significant skepticism about India, particularly with overseas investors, who say that India has not delivered its potential (despite its being the second-fastest-growing economy and among the top-performing stock markets over the past 25 years) and that equity valuations are too rich.”

It added, “However, such a view ignores the significant changes that have taken place in India, especially since 2014.”

Morgan Stanley’s Research had taken these 10 big changes namely, supply-side policy reforms, formalisation of the economy, Real Estate (Regulation and Development) Act, digitalizing social transfers, Insolvency and Bankruptcy Code, flexible inflation targeting, focus on FDI, India’s 401(k) moment, government support for corporate profits and MNC sentiment at multi year high, while filing the report.

The report said, “We expect a new cycle in manufacturing and capex, as we estimate the share of both to rise in GDP by approximately 5 ppt. We estimate that India’s export market share will rise to 4.5 per cent by 2031, nearly 2 times from 2021 levels, with broad-based gains across goods and services exports and there would be a major shift in consumption basket.”

“As India’s per capita income increases from USD 2,200 currently to about USD 5,200 by F2032, this will have major implications for change in the consumption basket, with an impetus to discretionary consumption,” the report further said.

While drawing the data for supply-side policy reforms, the research has gathered the figures related to India’s corporate tax at par with peers and infrastructure.

In 10 years, India’s base corporate tax rate has stayed below 25 per cent while for new companies with operations commencing before March 24, it has stayed at 15 per cent.

In terms of infrastructure development, the research has taken factors like national highways, broadband subscriber base, renewable energy and electrified railway route.

In the formalisation of the economy, Morgan Stanley had taken GST collections, which were showing upward trends over the years, and digital transactions which grew 76 per cent of the GDP.