India Set to Become Third-Largest Economy by 2030, Says S&P Global
India is on track to become the third-largest economy by fiscal 2030-31, driven by a robust projected annual growth rate of 6.7%, according to a report by the credit rating agency S&P Global titled India Forward Emerging Perspectives.
Key Projections and Recommendations
The report highlights the importance of continued reforms to improve business transactions and logistics, boost private sector investment, and reduce reliance on public capital. It also anticipates that the Indian equity market will remain dynamic and competitive due to strong growth prospects and better regulation.
Foreign inflows into Indian government bonds have surged since the country joined major emerging market indexes, and this trend is expected to continue. The report suggests that India must develop infrastructure and geopolitical strategies, particularly regarding its extensive coastline, to maximize trade benefits. A strong port infrastructure is required to match rising exports and bulk commodities imports, as about 90% of India’s trade is maritime.
Energy and Agriculture
The report points out the rising domestic energy demands and the need for sustainable technologies, including renewables and low-emission fuels, to balance energy security with energy transition plans. In agriculture, advanced technologies and new policies are needed to improve infrastructure and productivity, addressing critical issues such as irrigation, storage, and supply distribution to ensure food security and economic stability.
Technological Advancements
The use of AI is expected to boost economic growth, bringing opportunities for public-private partnerships to replicate the success of India’s digital infrastructure.
Current Economic Performance
India’s GDP grew by an impressive 8.2% during the financial year 2023-24, continuing to be the fastest-growing major economy. The economy grew by 7.2% in 2022-23 and 8.7% in 2021-22, according to official data. Many global rating agencies and multilateral organizations have also revised their growth forecasts for India upward.
In July, the International Monetary Fund (IMF) raised India’s growth projections for 2024 from 6.8% to 7%, reinforcing the country’s status as the fastest-growing economy among emerging markets and developing economies. The IMF attributed this to strong domestic demand and a rising working-age population.
Doubts Revealed
S&P Global -: S&P Global is a company that provides financial information and ratings. They help people understand how strong or weak an economy or company is.
Third-Largest Economy -: An economy is how much money a country makes from all its businesses and people. Being the third-largest means India will be the third richest in the world.
Annual Growth Rate -: This is how much the economy grows every year. For India, it’s 6.7%, which means the economy is getting bigger by that much each year.
Reforms -: Reforms are changes made to improve something. In this case, it means changes in laws and policies to make India’s economy better.
Infrastructure Development -: This means building things like roads, bridges, and schools. These are important for a country to grow and develop.
Sustainable Technologies -: These are new ways of doing things that don’t harm the environment. For example, using solar power instead of coal.
GDP -: GDP stands for Gross Domestic Product. It’s the total value of all goods and services produced in a country in a year.
IMF -: IMF stands for International Monetary Fund. It’s an organization that helps countries manage their economies by giving advice and loans.
Domestic Demand -: This means how much people in India want to buy goods and services. Strong domestic demand means people are buying a lot, which helps the economy grow.
Working-Age Population -: These are people who are old enough to work, usually between 15 and 64 years old. A growing working-age population means more people can work and help the economy grow.
