Blog

Mr. Tejas Desai

Partner at Ernst & Young

India continues to shine as a bright spot in the global economy, poised for steady growth driven by a myriad of factors, believes Tejas Desai, Partner, Private Equity & Financial Services – Tax & Regulatory services at Ernst & Young LLP, as he weighs in on the economic prospects of India in 2024 against the backdrop of global dynamics. “India’s growth momentum is expected to continue steadily in 2024 and beyond,” says Desai, highlighting key drivers such as rapid advancements in physical and digital infrastructure, increased government capital expenditure, and a diversified manufacturing footprint following post-Covid geopolitical realignments. Desai points to the decade-low banking NPAs and corporate leverage, along with a reformed and digitised tax ecosystem, as pivotal contributors to India’s robust economic performance.

Desai has a positive outlook for the investment climate for the medium-to-long term, underpinned by India’s structurally robust domestic growth, healthy corporate profitability, and supportive pro-growth policies. According to him, the significance of India’s inclusion in JP Morgan’s Government Bond Index-Emerging Markets (GBI-EM), is a testament to India’s growing prominence in the global economy. However, Desai cautions against near-term risks such as a slowdown in global growth, geopolitical tensions, and inflationary pressures, both globally and domestically, which could impact investment decisions in 2024.

Reflecting on government policies, Desai emphasises the importance of further improving India’s ease of doing business ranking to attract more foreign direct investment (FDI). “Though India has attracted FDI to the tune of USD 596 billion from FY 15 to FY 23, there is potential for greater capitalisation of opportunities presented by China plus one policy of global MNCs,” he says. Desai underscores the need for continued focus on predictability and stability in foreign investment rules, including entry norms and KYC requirements, to foster a conducive business environment. Moreover, he emphasises the importance of a balanced regulatory approach that ensures ease of doing business while preventing misuse, alongside the appropriate interpretation and implementation of tax laws.