India’s growth could rise to 6.25-6.75% by 2030 owing to supply chain shifts and reforms: UBS

economictimes.indiatimes.com:

supply chain shift happening owing to the US-China trade war, deglobalization and pandemic disruptions, according to a UBS report. While the report released Thursday noted that no single country could replicate China’s success in manufacturing, it said that India could benefit from supply chain shifts and reforms, which could also result in job creation. “Growth could rise to 6.25-6.75% YoY by 2030 under an optimistic scenario and 6.75-7.25% YoY under a blue-sky scenario, leading to job creation,” Tanvi Gupta Jain, chief India economist, UBS, noted.

It pointed out that Vietnam and India were key contenders, given their advantage in low-cost manufacturing, scale and infrastructure. For the near term, UBS economist noted that a broad-based recovery was yet to occur. “Despite reasonable headline growth, the underlying economic recovery post-pandemic remains uneven when looked at in terms of: 1) the rural-urban divide; 2) manufacturing vs.

services growth; and/or 3) affluent vs. lower-income household demand,” Jain pointed out. UBS predicts growth to slow to 6.1%, compared with 7.2% in the previous year.

It pointed out that a favourable base effect would help growth to reach 7.5-8% in the first quarter; the momentum would fall with growth averaging 5-6% for the rest of the year. “Capex growth has largely held up on higher government capex and demand for residential real estate holding up. However, the pick-up in private corporate capex remains gradual,” the report said.RBI has set a growth target of 6.5% for FY24 and inflation of 5.4%.