“To give you a bit of perspective, my first trip to India was in 2005,” Dimon told ET in an interview. “I had just become the CEO of JP Morgan. And I went to a small building in the old financial district. And I think we did research on 15 or 20 companies. Today, we do research on close to 140 companies which helps educate the world about Indian companies. We bank 850 multinationals here. We’ve got close to 55,000 employees in the Corporate Centre supporting our global operations and our technology. It’ s engineering, cyber, tech, data, AI. We are building out a robust payment systems here for clients . And all these things you’re doing are gonna make you grow more. And it’s achievable. And you need strong leadership, as you have with PM Modi.”
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How the world reads India’s growth story
Dimon is not the only one to sound bullish about India’s economic growth potential. Recent global commentary and analysis has been very positive for India’s growth prospects. JPMorgan’s Managing Director of Asia Pacific Equity Research, James Sullivan, expects a massive $100 billion of inflows coming into India over the next few years. “I would argue very strong long-term tactical drivers that make India a key overweight from a structural perspective from JPMorgan,” Sullivan said in an interview with CNBC-TV18.
John Chambers, who heads the India US Strategic Partnership Forum and is Chairman Emeritus of CISCO is highly optimistic about the future of the Indian economy, the current share market situation and the growth of innovation in the country. In an interview with ET last week, he said, “I always try to think far out. India will probably be 90 to 100% larger than China at the end of the century and (by a) 30 to 40% margin of the US. That is the most likely outcome. [Becoming the second largest economy] could happen somewhere in the 30-40 year type of window. I think it needs to be adjusted along the way, because it (India) has moved faster than anybody thought it would, by a lot.”
An S&P Global report said last week that India is on track to becoming the third-largest economy by 2030-31. On Tuesday, S&P Global Ratings retained India’s growth forecast at 6.8 per cent for the current fiscal and said it expects the RBI to start cutting interest rates in its October monetary policy review. In the economic outlook of Asia Pacific, S&P Global Ratings also retained its GDP growth forecast for the 2025-26 fiscal at 6.9 per cent and said solid growth in India will allow the Reserve Bank to focus on bringing inflation in line with its target. A few days ago, Deloitte said India continues to be a bright spot in an otherwise gloomy global outlook and the country could clock a 7 per cent growth in the current fiscal despite the headwinds.Early this month, the World Bank raised the growth forecast for the Indian economy for FY25 to 7% from 6.6% projected earlier. A few days earlier, Moody’s Ratings had revised upwards India’s economic growth projections for 2024 to 7.2% from 6.8%. Earlier, the International Monetary Fund (IMF) and Asian Development Bank (ADB) had revised upward growth forecast for the Indian economy to 7% for FY25. In June, ratings firm Moody’s said India will remain the region’s fastest-growing economy, sustaining last year’s domestically driven momentum and its policy momentum is expected to continue even though the new government took charge with a reduced majority.
Amid challenging global conditions, where is India headed?
Amid geopolitical uncertainties and relatively restrictive monetary policy, global economic activity experienced a deceleration in 2023 to 2.6% while India showed “extraordinary resilience against challenging external conditions” and grew at 8.2% in FY24, as the fastest-growing major economy in the world, the World Bank said in its latest India Development Update.India’s growth continues to be strong despite a challenging global environment, and a recovery in agriculture will partially offset a marginal moderation in industry with services expected to remain robust, according to the report.
Despite cyclical moderation this fiscal year, India is set to remain the fastest-growing large economy and expand its contribution to global growth, as per an S&P Global analysis. India is well positioned to improve its prospects by continuing its infrastructure buildout and accelerating growth-enhancing reforms. In the current environment, the private sector needs to take the lead on achieving a balanced and sustainable lift in the investment cycle, S&P Global says. Equally important is the limiting of food inflation by addressing structural bottlenecks and climate risks, as well as fostering conditions for supportive monetary policy. The Union Budget announcements reflect these imperatives. All eyes are now on execution.
As per a recent Moody’s analysis, India finds itself in a macroeconomic “sweet spot” with solid growth and moderating inflation. It said household consumption is poised to grow as headline inflation eases toward the RBI’s target. “Indeed, signs of a revival in rural demand are already emerging, on the back of improving prospects for agricultural output amid above-normal rainfall during the monsoon season,” it said. Moreover, non-financial corporate and bank balance sheets are significantly healthier than before the pandemic, and firms are increasingly tapping equity and bond markets to raise capital. Although manufacturing has gained limited traction over the past decade, underlying improvements in the domestic operating environment and broader global trends improve prospects for India’s manufacturing sector going forward, according to the ratings agency.
Geopolitical strife can also distort FDI flows and influence investment decisions and India seems to be benefiting here, Moody’s had said in June. The lack of recovery of FDI into China, particularly in strategic sectors like semiconductors, stems from US and EU policies to boost domestic production and mitigate risks from non aligned foreign suppliers.
The World Bank’s latest India Development Update has highlighted the critical role of trade in boosting growth. “India can boost its growth further by harnessing its global trade potential,” said Auguste Tano Kouame, World Bank’s Country Director in India. “In addition to IT, business services and pharma where it excels, India can diversify its export basket with increased exports in textiles, apparel, and footwear sectors, as well as electronics and green technology products.”
The World Bank update recommends a three-pronged approach towards achieving the $1 trillion merchandise export target by 2030: reducing trade costs further, lowering trade barriers, and deepening trade integration.
(With inputs from agencies)