S&P Global Ratings said India will be the world’s third-largest economy by 2030, but a major test for the country would be to unlock the ‘immense opportunity’ and become the next big global manufacturing hub.
The US-based rating agency expects India to be the fastest growing major economy in the next three years, with GDP growth reaching 7 per cent by 2026, from 6.4 per cent projected in the current fiscal.
The Indian economy grew 7.2 per cent in 2022-23. India’s GDP expanded 7.8 per cent and 7.6 per cent in the June and September quarters, respectively.
“Developing a strong logistics framework will be a key in transforming India from a services-dominated economy into a manufacturing-dominant one,” S&P said in its report titled ‘Global Credit Outlook 2024: New Risks, New Playbook’.
India, with a GDP size of $3.73 trillion at the end of 2022-23 fiscal, is currently the fifth largest economy in the world behind the US, China, Germany and Japan.
The International Monetary Fund (IMF) has projected India to become a $5 trillion economy with the third largest GDP in 2027-28.
S&P said unlocking the labour market potential will largely depend upon upskilling workers and increasing female participation in the workforce. Success in these two areas will enable India to realise its demographic dividend.
A booming domestic digital market could also fuel expansion in India’s high-growth start-up ecosystem during the next decade, especially in financial and consumer technology, S&P said, adding, in the automotive sector, India is poised for growth, building on infrastructure, investment, and innovation.