The Hindu Business Line : Morgan Stanley Asia now more bullish on India than on China

Mumbai, June 3 The definitive Congress win in the recent general elections has altered his outlook on India, said Mr Stephen S. Roach, Chairman of Morgan Stanley Asia.

After having been more bullish on China than on India all along, he is now more bullish on India, Mr Roach said at an investor summit organised by his firm here.

The Congress’ victory would make the Government more effective in pushing forward the necessary reforms, he said.

Though India has been improving on the macro-economic and micro-economic fronts, what was missing was a political impetus to reforms, said Mr Roach.

He said that he stands by Morgan Stanley’s forecast of India’s GDP standing between 5.5 per cent and 6.5 per cent for the next couple of years.

“This is an encouraging trend when the rest of the world is going through deep recession. Though it might be a little premature to think that India will be able to achieve 8 per cent growth… that it is not possible for at least another two to three years.”

He also said that the new Indian Government has to be aggressive in infrastructure spending even if it means partially offsetting spending on other sectors. Disinvestment is also important for tackling the massive budget deficits.

Mr Roach said one of the key concerns he has regarding India is its budgetary deficits.

“India would continue to be vulnerable to external capital inflows if the new Government is not able to aggressively tackle the problems of these deficits.”

He said he is optimistic about India though he cannot say it with “iron-clad surety”, but rather he is more “hopeful.”

Questioned on some of the “positive data” emerging on the global front, he said that it was “less negative rather than positive” and that one should keep that in mind.

“The current rally in the global markets is not justified as the fundamentals have not changed. We can expect a correction in the global markets soon.”

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