GDP growth seen at 7.3% over 2020-22

GDP growth seen at 7.3% over 2020-22

The Indian economy is expected to witness an average GDP growth of 7.3% over 2020-22, says a Morgan Stanley research report.

According to the global financial services major, the structural growth story in India remains strong from a medium-term perspective.

"The uptick in the private capex cycle, which we anticipate will begin in 2018, will ensure that the economy enters into a sustained and productive growth cycle," Morgan Stanley said in a research note, adding that over 2020-22, it expects the economy to post an average GDP growth of 7.3%.

Moreover, the overall policy mix will also remain supportive of a further improvement in productivity, which will help keep macro stability risks limited, it added.

The global brokerage expects recovery in private capital spending in 2018 which will aid in overall economic recovery.

Moreover, corporate returns expectations and balance sheet fundamentals are also improving, and a strengthening financial system will be able to meet investment credit demand. "This sets the stage for a fully fledged recovery in 2018, and we expect real GDP growth to accelerate from 6.4% in 2017, to 7.5% in 2018, and further to 7.7% in 2019," it said.

On prices, the report said the cyclical growth recovery and normalising food prices are expected to drive a pick-up in headline inflation. "Against the backdrop of a better macro outlook, we expect the RBI to hike in the second half of fiscal year 2019," it added.

The RBI in its fifth bi-monthly review kept the repo rate unchanged at 6% and reverse repo at 5.75%.

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