Morgan Stanley, the US-based global investment bank, has come out with a report detailing India's transformation under the Narendra Modi government. In a big endorsement for the Modi government, the Morgan Stanley report highlights how India has undergone significant changes because of the government's policy choices, especially since 2014.
The report, India Equity Strategy and Economics: How India Has Transformed in Less than a Decade, highlights the 10 big changes, mostly because of India's policy choices, and their implications for its economy and market.
Supply-side policy reforms: The Modi government has undertaken a series of supply-side policy reforms, such as the Goods and Services Tax (GST), the Insolvency and Bankruptcy Code (IBC), and the Pradhan Mantri Jan Dhan Yojana (PMJDY). These reforms have helped to improve the efficiency of the Indian economy and make it more competitive.
Formalisation of the economy: The Modi government has also made efforts to formalise the Indian economy. This has been done through measures such as the Demonetisation of high-value currency notes and the introduction of the GST. The formalisation of the economy has helped to increase tax revenue and reduce the size of the informal sector.
Real Estate (Regulation and Development) Act: The Real Estate (Regulation and Development) Act (RERA) has helped to bring transparency and accountability to the real estate sector. This has made it easier for home buyers to purchase property and has helped to protect their interests.
Digitalizing social transfers: The Modi government has also made efforts to digitalize social transfers. This has been done through measures such as the Direct Benefit Transfer (DBT) scheme. The DBT scheme has helped to reduce corruption and leakages in the social sector and has ensured that benefits reach the intended beneficiaries.
Insolvency and Bankruptcy Code: The Insolvency and Bankruptcy Code (IBC) has helped to improve the corporate bankruptcy resolution process in India. The IBC has helped to reduce the number of stressed assets in the Indian economy and has made it easier for companies to exit from the market.
Flexible inflation targeting: The Modi government has adopted a flexible inflation targeting framework. This framework has helped to keep inflation under control and has created a more conducive environment for economic growth.
Focus on FDI: The Modi government has focused on attracting foreign direct investment (FDI) into India. The government has taken a number of measures to attract FDI, such as simplifying the FDI approval process and providing tax breaks to foreign investors.
India's 401(k) moment: The Modi government has launched the Pradhan Mantri Vaya Vandana Yojana (PMVVY). The PMVVY is a pension scheme that is open to all citizens of India above the age of 60. The PMVVY has helped to increase financial security for the elderly in India.
Government support for corporate profits: The Modi government has provided support to corporate profits through measures such as the reduction in corporate tax rates. The reduction in corporate tax rates has helped to boost corporate investment and has led to job creation.
MNC sentiment at multiyear high: The sentiment among multinational companies (MNCs) towards India is at a multiyear high. This is due to a number of factors, such as the government's pro-business policies, the growing domestic market, and the skilled workforce in India.
The Morgan Stanley report concludes that India has undergone a significant transformation under the Modi government. The report says that India is now a more attractive destination for foreign investment and that the country is well-positioned to sustain its economic growth in the coming years.