India is poised to emerge as a global outperformer, with structural drivers setting the stage for sustained economic and corporate earnings growth, according to BofA Global Research.
Ranking as the second-best country globally after the US in terms of expected returns over the next three decades, India is projected to deliver a 7% compound growth rate in dollar terms, thanks to a strong structural base and stock market depth, said the brokerage.
Despite near-term market caution due to high valuations, BofA remains constructive on India's long-term outlook.
Here are the nine key structural themes BofA believes could shape the country's growth trajectory:
Rapid Infrastructure Build-Out: Infrastructure capacity additions from fiscals 2015 to 2030 are projected to surpass cumulative additions made over the last 65 years, with a 3.25 times economic multiplier over the long term.
Productivity Gains: Improved energy efficiency, logistics, and capital-output ratios signal a productivity-driven renaissance akin to the 2003–07 period.
Digitisation: With over 0.9 billion internet users and ultra-low data costs, India has seen a 140 times surge in digital transactions over the last eight years, driving the rise of its digital economy.
Financialisation: Bank account penetration has surged to 90% from 35% in 2011, and 11–13% of Indians now have access to mutual funds, providing a solid foundation for financial services growth.
Household Savings Channelisation: Shifts from physical to financial savings are boosting India's gross savings pool, with improved home ownership, better farming incomes, and rising gold monetisation aiding capital market participation.
Discretionary Consumption Shift: As India progresses to upper middle-income status ($5,000/capita), consumption is shifting from essentials to discretionary categories, driven by a premiumisation trend.
Formalisation: GST, UPI, and e-invoicing are expanding the formal sector, broadening the tax base and expanding addressable markets.
Current Account – On path to potential surplus: Policy reforms, manufacturing incentives, and export tailwinds are pushing India closer to a current account surplus.
Decarbonisation: India invested $126 billion in capex over the last decade, with plans to invest another $270 billion from fiscals 2025 to 2030 as it pushes toward energy transition goals.
With India being the top country globally with a high number of stock compounders, BofA expects this to continue and sees India as a long-term story worth backing.
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