Indian Economy to enter ‘Goldilocks’ phase soon: Report

• According to a research report tabulated by Morgan Stanley, India along with Indonesia, Singapore
and China are among the best positioned economies in Asia, as the region gradually moves from
below-average growth to a new ‘Goldilocks’ phase in 2021.

• The report published by noted economists Devi Tan, Zac Su, Jin Choi and Jonathan Cheung - submits
that economies, including India, have witnessed major policy decisions from the government which
are detrimental in shaping up their economic resurgence.

• ‘Goldilocks’ economy refers to a desirable state of economy which is characterized by low

unemployment, low Benchmark rate, low Inflation and Consumer Price Index, increase in asset prices
and a GDP growth rate of 2-3% which serves as a conducive condition of economic progression.

• The report observed a considerable momentum in Capital Expenditure (CAPEX) within AxJ (Asia
except Japan) economies while important CAPEX indicators such as capital goods imports and Private
Investment Index showed less than expected decline.

• Commenting specifically on the economies of India and Indonesia the report mentioned “Their higher
structural growth and the potential for them to be relative beneficiaries from supply chain relocation
could also enable them to take bigger strides in the recovery path”.

• Furthermore, it stated "We expect 2021 to show the overall AxJ (Asia except Japan) growth recovery
being sustained and accelerating above-trend, amid a combination of sequential growth and low base
effects".

• This comes after in India the Monetary Policy Committee (MPC) unanimously voted to keep policy
rates on hold, conveying its accommodative stance and steps were outlined by the government,
estimated cost of which is expected to be Rs.467 billion (0.25% of fiscal year 2021 estimated GDP),
to deliver a stimulus for increased consumption and investment.

• The rate and amount of recovery has been promising, even though some of it can be accredited to pent-
up demand. While the government has declared a major liquidity stimulus in addition to the initiatives
of the RBI, given the poor fiscal situation, direct budgetary spending has been diffident.

References: https://thepolicytimes.com/indian-economy-to-enter-goldilocks-phase-soon

https://economictimes.indiatimes.com/news/economy/indicators/goldilocks-in-covid-pandemic-
things-still-under-control-morgan-stanley/articleshow/79592169.cms