Recent tax and technological reforms in India could help give the country the fastest-growing economy in the world, according to research by Morgan Stanley. File Photo by Divyakant Solanki/EPA
Oct. 17 (UPI) -- India could have the world's fastest-growing economy over the next decade and see major growth on the U.S. dollar, Morgan Stanley Research said this month.
The research arm of the investment firm said in a report that Indian tax reform and the digitization of the country's predominantly cash-based economy will contribute to major growth over the next decade.
"The country was already on a strong trajectory, but digitization puts India's nominal GDP growth on track to compound annually by more than 10 percent in U.S. dollar terms over the coming decade," said Anil Agarwal, head of Asian financial research at Morgan Stanley. "The result could be a multi-trillion-dollar opportunity."
India currently has the world's seventh-largest economy, but is expected to be the third-largest by 2027 with a $6 trillion GDP.
Morgan Stanley said a major contributor to that growth is Aadhaar, India's program to give its citizens a biometric identification verifiable by fingerprint or iris scan. Aadhaar paved the way for Jan Dhan, a program to give Indian households a bank account. Since 2014, Indians opened nearly 300 million accounts.
Account-holders are urged to link their accounts with their Aadhaar biometric identification for easy access. In addition, more accounts are accessible through mobile phones.
"These individuals are not attached to old banking habits and they will have access to mobile phones and smartphones," said Ridham Desai, head of India research. "We would expect them to adopt digital banking much more quickly than past generations."
Despite the optimism from Morgan Stanley, the International Monetary Fund lowered India's growth projection to 6.7 percent this year, which is 0.5 percent lower than two previous projections this year.
The IMF also lowered its projection for 2018 to 7.4 percent, down 0.3 percent from previous projections, and commended structural reforms made in India and said the country "is for the medium and long-term on a growth track."