India’s economic growth is expected to accelerate over the next five years, driven by robust private consumption, which currently accounts for 55 per cent of the country’s gross domestic product (GDP), Union Mutual Fund said in a report on Thursday.
The rise in India’s per capita income over the past 15 years was driven by sharp growth in private consumption, which currently accounts for 55 per cent of GDP, the report said.
India’s economic growth is expected to accelerate over the next five years, driven by robust private consumption, which currently accounts for 55 per cent of the country’s gross domestic product (GDP), Union Mutual Fund said in a report on Thursday.
Titled “The Elephant dances on”, authored by Sanjay Bembalkar and Hardick Bora, co-heads of Equity at Union AMC, the report makes a strong case for investing in India.
The study highlights how India is firmly on the path of achieving economic superiority “rarely been achieved before”.
Says Sanjay Bembalkar: “When we own more cars, consume more electricity, use more internet, and travel more, it will drive private consumption and government capex to facilitate the same. That's the fuel for economic growth.”
The report states that Indians consume far less in areas like nutrition, electricity, credit cards, insurance, equity market investing, quick service restaurants, etc., compared to the average citizens of top 10 nations; hence, the room for incremental growth is significant.
“The gap between India and the rest is bridging fast and is driving growth for the country. And that is why we are not perturbed by short-term volatility in the markets and are bullish on the long-term prospects of India,” says Hardick Bora.
The report draws reference from the International Monetary Fund’s (IMF) observation that India will likely be the world’s 9th fastest growing nation in the next five years.
What makes India unique, it noted, is the fact that eight other countries ahead in terms of growth rates, have a GDP of less than $919 billion compared to India’s $3.17 trillion, as per 2021 GDP data. “India is not only getting larger but is also projected to grow at a much faster rate compared to other sizeable economies,” the report said.
While most countries have been affected by the Russia-Ukraine war, geopolitical turmoil, and inflation, the question on every Indian investor’s mind is how much it would impact India.
The report stressed that though India’s GDP per capita has increased from $814 in 2006 to $2,280 in 2021, almost three times higher, it is still far behind the average per capita GDP of the world’s top 10 largest nations, at $43,037.
The rise in India’s per capita has been driven by sharp growth in private consumption, it said.
Concluding the report, Union AMC emphasized that India is at the cusp of achieving an outstanding economic milestone.
Says Hardick Bora: “We are lucky to be born in India at the right time to benefit from its bountiful growth. Whether you like it or not, the elephant will not march but run.”