Morgan Stanley chief economist Stephen Roach believes that India, for all its persisting deficiencies, could be the world's most exceptional economic development story over the next few years.
In his latest report on India, Roach has said that human capital, rising savings, increasing foreign direct investment (FDI), and its growing entrepreneurial spirit will drive the country's economic development in the medium term.
Roach waves away comparisons with China, maintaining in his report that India is over fixated with China. "In the end, the story is not about China or India, but most likely China and India," he writes. "Are the rich countries of the developed world prepared for the ultimate endgame of globalisation?"
India's entrepreneurs are making great progress in three most important areas - rural reform, retail and infrastructure, says the report. Citing the case of the Reliance Retail model, he writes that its concept and execution was "fascinating and would benefit India in term of lifting rural income and boosting consumer purchasing power."
He has also noted that India's entrepreneurs were playing a role in developing much-needed infrastructure, and cited the example of the GMR group that is developing Delhi and Hyderabad airports. He said the Delhi Metro Rail Corporation was comparable to New York City Straphanger.
Infrastructure, however, remained a glaring laggard. "The infrastructure contrasts are painfully obvious, to any one travels in both India and China," the report says.
Roach adds that India's corporate leaders compare very favourably with their counterparts in any other country in the world. "Not only is this a huge advantage when compared to China, but it is likely to be a major plus for India as it fights for market share in the global competitive sweepstakes," he notes
Morgan Stanley's India equity strategist Ridham Desai adds that any correction in the equity market in the 15 to 20 per cent range should be viewed as important buying opportunities.