Budget 2024: Expect more spending on rural infra, says Morgan Stanley's Upasana Chachra

The Indian economy will record a more broad-based recovery in the private capital expenditure in FY25, said Upasana Chachra, Chief India Economist at Morgan Stanley. In an interview with BTTV Managing Editor Siddharth Zarabi, Chachra said the capital expenditure in the Indian economy will probably now get more support from the private side as well.

On the public capex spending, she said the growth still remains pretty robust and growing above nominal GDP. She did not see any change in that in FY25.

On the economic growth, Chachra  said, “We remain quite constructive on India's outlook say from a near term fiscal 25 perspective or the medium term growth story as well, where we think that India is likely to be the fastest growing economy.”  

The recent Lok Sabha election results reflect continuity in the government and also in the key ministerial positions and therefore policy continuity as well, she said, adding that their forecast on India’s economic growth remains unchanged  in both the near term or the medium term.

Morgan Stanley India expects the Indian economy to grow at a rate of 6.8% in the current fiscal.

Commenting on inflation, the economist said it has been more range bound in this year, around 4.9 to 5.1% largely.  If monsoon this year is fine, that will help to alleviate the concerns around food inflation, said Upasana.

Replying to a question on the RBI MPC , she said the central bank is likely to maintain a status quo this year and also next year.

An easing of policy rates is likely if inflation surprises on the downside or if they are wrong on the growth outcomes, added Upasana.

On the upcoming full-fledged Union Budget in July 2024, Upasana said she expects much more increase in spending towards capex or rural infra than toward revenue spending.