Morgan Stanley Predicts Big Growth in India’s Infrastructure Spending

Investment banking company Morgan Stanley has forecasted a 15.3% compound annual growth rate (CAGR) in infrastructure investments in India. This is expected to result in a cumulative expenditure of USD 1.45 trillion over the next five years.

According to Morgan Stanley’s report, The New India – Infrastructure, this surge in investment will significantly boost the investment rate and foster a prolonged period of high productive growth. The report states, “Infrastructure investment is the backbone of any economy – and India has not only increased its investments on infrastructure in the last decade but also has worked on improving their productivity.”

The report highlights the role of Prime Minister Gati Shakti, also known as the National Master Plan for Multi-modal Connectivity, in accelerating the execution of infrastructure projects and reducing cost overruns. This initiative is expected to unlock productivity gains and enhance efficiency.

Morgan Stanley’s report outlines four key macroeconomic implications of this growth in infrastructure spending: a profit boom driven by increased capital expenditures (capex), enhanced macroeconomic stability, improved efficiency and productivity, and more sustained growth. The report also notes positive impacts on the equity market, benefiting enablers, developers (or asset owners), and adopters.

Infrastructure investment is anticipated to increase from 5.3% of GDP in the financial year (FY) 2024 to 6.5% of GDP by FY 2029.