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Key Points

Morgan Stanley projects India will maintain 6.5% annual growth for the next ten years, positioning it among the world's fastest-growing economies. The country has significant potential to expand its export market share beyond the current 1.8% through comprehensive reforms. With 84 million people expected to join the workforce, accelerated growth in manufacturing and exports could create substantial job opportunities. However, the report warns that AI may impact employment in key sectors like IT services, requiring strategic policy interventions.

Key Points: Morgan Stanley Predicts India 6.5 Percent Growth Next Decade

  • India's export sector has huge growth potential with current 1.8% market share
  • Every manufacturing export job creates two additional jobs in related sectors
  • Comprehensive reform package needed including infrastructure and labor skills
  • 84 million people expected to join workforce in coming decade
  • AI may reduce job growth in IT and domestic services sectors
  • 7.4% GDP growth needed to maintain stable unemployment rates
2 min read

India set for 6.5 pc average growth over next decade: Morgan Stanley

India set for 6.5% annual growth through 2034 with potential for 7.4% if exports and manufacturing accelerate, creating 84 million new jobs.

"In our base case, India's GDP will grow at this rate over the coming decade, one of the fastest-growing economies globally. - Morgan Stanley"

New Delhi, Sep 30

India is set for a 6.5 per cent annual growth rate for the next decade and can clock higher growth if the industrial and export sectors expand at a much faster pace, US investment banking company Morgan Stanley said in a report on Tuesday.

The investment banking firm said that India has huge room for growth in the export sector, which can be boosted through a comprehensive reform package.

Analysts had earlier reported that India’s economy is set to grow faster at 6.5 per cent in FY2026 GDP, up from the previous expectation of 6 per cent, due to GST reforms. Morgan Stanley also concurred with this view, saying, "In our base case, India's GDP will grow at this rate over the coming decade, one of the fastest-growing economies globally."

Morgan Stanley cited studies that have shown that every job created by manufacturing exports creates two other jobs in related sectors like transportation and logistics.

In this context, India presents a significant opportunity to enhance its export market share, which currently stands at 1.8 per cent, a figure significantly lower than its weight in terms of working-age population and GDP.

Morgan Stanley suggested a comprehensive reform package, including accelerated build-out of public infrastructure, especially for last-mile connectivity.

Further, it highlighted the need for "a systematic approach that incentivises state governments to improve the business environment and ensure that the labour force is adequately skilled."

The report acknowledged that policymakers are already making efforts, but the magnitude of the jobs problem demands a need to accelerate the pace.

At least 84 million people are expected to join the workforce in the coming decade, even assuming that participation rates are unchanged.

"Over the medium term, one pressing issue is that AI will reduce job growth prospects, particularly for the IT services sector – which has been a key source of employment creation – and for the domestic services sector as well," it hinted.

The scenario analysis suggests that an average GDP growth rate of 7.4 per cent will be needed to ensure a stable unemployment rate, assuming participation rates stay constant, the report said.

"If we allow for a gradual rise in participation rate to 63 per cent, an average GDP growth rate of 9.3 per cent is needed to ensure a stable unemployment rate," it added.

- IANS

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Reader Comments

R
Rohit P
Great analysis but I'm concerned about the AI impact on IT jobs. That sector has been a major employer for educated youth. We need proper skilling programs to handle this transition.
A
Arjun K
84 million new job seekers in next decade! That's huge pressure. Hope the growth actually translates to quality employment, not just numbers. Manufacturing sector needs to step up big time.
S
Sarah B
As someone working in logistics, I can confirm that export growth creates ripple effects. Better infrastructure and last-mile connectivity will definitely boost our sector. Exciting times ahead!
V
Vikram M
While the growth projections look good, I'm skeptical about state governments implementing reforms effectively. Coordination between center and states has always been challenging in India.
K
Karthik V
Only 1.8% export market share? We have so much potential! With proper policies and infrastructure, we can easily double this. Make in India needs to become Export from India! 💪

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