India is all set to become world's third-largest economy by 2030, according to S&P Global Ratings. The agency, in its Global Credit Outlook 2024, projects a 6.4% GDP growth in the fiscal year 2023-24, a slight decrease from the previous financial year's 7.2%. Looking ahead, the growth rate is expected to persist at 6.4% in the subsequent fiscal year (2024-25), gradually increasing to 6.9% and reaching 7% in the 2026-27 fiscal year.
S&P envisions India achieving the 7% GDP growth milestone in 2026-27, positioning the country to become the third-largest global economy by 2030 and forecasting it as the fastest-growing major economy over the next three years. Despite being presently ranked as the fifth-largest economy globally, following the US, China, Germany, and Japan, India has the potential to emerge as a significant global manufacturing hub.
The key challenge lies in developing a robust logistics framework, transforming India from a service-oriented economy to one dominated by manufacturing. Realizing the demographic dividend hinges on unlocking the labor market potential through upskilling workers and enhancing female participation in the workforce, according to S&P.
"A paramount test will be whether India can become the next big global manufacturing hub, an immense opportunity. Developing a strong logistics framework will be key in transforming India from a services-dominated economy into a manufacturing-dominant one," S&P said.
"Success in these two areas will enable India to realize its demographic dividend," it added.
The agency highlights the importance of India's burgeoning domestic digital market, which could propel growth in the high-potential startup ecosystem, particularly in financial and consumer technology, over the next decade. In the automotive sector, India is poised for expansion, leveraging infrastructure, investments, and innovation. S&P emphasizes the need for India to capitalize on these opportunities to fuel economic growth.
(With Agency Inputs)