India Poised for 6.5% Average Growth Over the Next Decade: Morgan Stanley

New Delhi: India is projected to record an average annual growth rate of 6.5% over the next decade, according to a report by US investment banking firm Morgan Stanley. The outlook could improve further if the country’s industrial and export sectors expand at a stronger pace.

The report highlighted that India has considerable untapped potential in exports, with its current global market share at just 1.8%—far below its proportion of global GDP and working-age population. A comprehensive reform package, including accelerated public infrastructure development and improved last-mile connectivity, could unlock faster growth.

Morgan Stanley emphasized that every manufacturing export job typically creates two additional jobs in supporting sectors such as logistics and transportation. It also recommended a systematic framework to encourage state governments to improve the business climate while ensuring adequate skilling of the labour force.

India faces a pressing challenge in employment creation, with an estimated 84 million people expected to join the workforce over the coming decade, even if participation rates remain unchanged.

The report also warned of the potential impact of artificial intelligence, which could slow job growth in IT services—historically a major employment driver—as well as in domestic services.

According to Morgan Stanley’s scenario analysis, to maintain a stable unemployment rate:

• 7.4% GDP growth would be required if participation rates remain constant.

• If participation rises gradually to 63%, the economy would need to grow at an average of 9.3%.

Despite these challenges, Morgan Stanley said India is set to remain one of the fastest-growing economies globally, supported by ongoing policy measures and structural reforms.

With inputs from IANS