Opinion | Modi’s India Emerges As Economic Safe Haven While West Stumbles

The past week has seen several international financial and investment firms reaffirm their bullishness on India. For starters, Morgan Stanley in its latest report said India is on its way to become the world’s third-largest economy by 2028 as its share in global production rises, driven by macro stability influenced policy and better infrastructure.

The Indian economy is projected to expand to $4.7 trillion by 2026, which will make it the fourth largest in the world behind the US, China and Germany. In 2028, India will overtake Germany as its economy will expand to $5.7 trillion. Consequently, India’s share in the world GDP is projected to rise from 3.5 per cent to 4.5 per cent in 2029.

Morgan Stanley’s GDP per capita projections for India are quite positive. It projects three scenarios for India’s growth: Bear — where the economy expands to $6.6 trillion by 2035 from $3.65 trillion in 2025; Base — where it grows to $8.8 trillion and Bull — where the size balloons to $10.3 trillion. Morgan Stanley sees India’s GDP per capita rising from $2,514 in 2025 to $4,247 in the Bear scenario in 2035, $5,683 under the Base scenario and $6,706 under the Bull scenario.

Then there’s credit rating agency Moody’s saying India’s economic growth will surpass 6.5 per cent in the fiscal year 2025-26, up from 6.3 per cent in FY 2024-25. This growth, Moody’s claims, will be driven by higher government capital expenditure, tax cuts to boost consumption, and monetary easing through interest rate cuts.

Meanwhile, private equity behemoth Blackstone plans to double its investments in India from $50 billion to $100 billion in the coming years. In an exclusive interview with MoneyControl, Blackstone CEO Stephen Schwarzman said India is the firm’s top performing market and best investment destination. An oft-repeated claim among sceptics is that foreign investors are pulling their money (FIIs) out in record numbers, lending heightened volatility to Indian markets.

Schwarzman, however, says Blackstone has seen several such cycles in India. He added: “We look at the fundamentals in the country. It has excellent stability and political leadership. Regulations have gone down from where we had started. India has a very vigorous population, full of young people. There is a preference of technology. So, we are very positive on the country. It is great to be back."

Blackstone’s analysis is backed by global consultancy firm Bain and Company’s recent ‘India Venture Capital Report 2025’. Bain & Co reports that India’s venture capital (VC) sector showed resilience and recovery in 2024, with funding surging to $13.7 billion—1.4 times higher than in 2023. Robust domestic fundamentals, supportive regulatory reforms, and growing public market activity have reinforced India’s status as the second-largest VC hub in the Indo-Pacific region.

The growth in VC activity was driven by a sharp increase in the number of deals, rising from 880 in 2023 to 1,270 in 2024— a 45 per cent jump. Most of these were small- and mid-sized deals (under $50 million), which grew by about 1.4 times and made up around 95 per cent of total deals. Larger deals (over $50 million) nearly doubled, returning to pre-pandemic levels as companies like Zepto, Meesho, and Lenskart attracted significant investments.

Venture capital and growth funding in software and SaaS, including generative artificial intelligence (AI), increased by about 1.2 times to $1.7 billion from 2023 to 2024. Investments in generative AI alone surged 1.5 times, benefiting both AI-focused startups and companies integrating AI into their operations. This expansion is crucial for India, as it strengthens the country’s position in the global AI ecosystem, fosters innovation, and enhances productivity across industries.

According to Bain and Co, India’s start-up ecosystem demonstrated a growing emphasis on profitability, innovation, and regulatory alignment throughout 2024. Recent policy reforms, including the removal of angel tax, lower long-term capital gains (LTCG) tax rates, elimination of the National Company Law Tribunal (NCLT) process, and streamlined foreign venture capital investor (FVCI) registrations, have created a more favourable environment for India’s start-up ecosystem. These changes have boosted investor confidence and facilitated smoother funding access, signaling strong growth momentum for the sector.

Speaking of start-ups, Nandan Nilekani — the brain behind India’s booming digital public infrastructure — expects the number of start-ups in India to grow 20 per cent every year to reach one million in the next 10 years. Nilekani predicts that by 2035, India will emerge as the world’s most preferred IPO market. Currently, India holds the position of the second-largest IPO market, just behind the United States.

There is a broad consensus that India is on the right path. What is noteworthy is the fact that almost every financial institution and rating agency is bullish on India, at a time when the West is squabbling. Donald Trump’s tariff obsession could spell trouble for major world economies, especially in Europe. On the contrary, India appears well-placed to not just mitigate the effect of Trump tariffs, but also leverage the personal rapport between Modi and the American President to its benefit.

Easing inflation, proactive government policies focused on boosting consumption, optimistic growth projections from leading financial institutions, increased private equity investment, and a vibrant start-up ecosystem indeed paint a compelling picture of India’s upward economic trajectory despite global headwinds.

Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18’s views.