New Delhi: American credit rating agency S&P Global Ratings said on Tuesday that India will become the world’s third largest economy by 2030 as it forecast the country’s gross domestic product or GDP growth reaching 7 per cent in the 2026-27 fiscal year. “India is set to become the third-largest economy by 2030, and we expect it will be the fastest growing major economy in the next three years,” the ratings agency said in its Global Credit Outlook 2024.
Expecting India to be the fastest growing major economy in the next three years, the US-based rating agency said that a major test for the country would be to unlock the ‘immense opportunity’ and become the next big manufacturing hub in the globe. As far as the status of its economy is concerned, the Indian economy grew 7.2 per cent in the 2022-23 fiscal ended March 2023. India's GDP expanded 7.8 per cent and 7.6 per cent in the June and September quarters respectively.
“It is expected that the GDP growth will reach 7 per cent by 2026, from 6.4 per cent projected expansion in the current fiscal. India is set to become the third-largest economy by 2030. 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,” it said.
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. Even the International Monetary Fund (IMF) has projected India to become a $5 trillion economy with the third largest GDP in 2027-28. “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,” it added.
A booming domestic digital market, it said, could also fuel expansion in India's high-growth start-up ecosystem during the next decade, especially in financial and consumer technology. “In the automotive sector, India is poised for growth, building on infrastructure, investment, and innovation,” it added.
The rating agency further said that many emerging markets, including Indonesia, India, South Africa, and Mexico, will hold elections in 2024. Low levels of policy predictability can undermine investor sentiment and derail existing investment potential. “Emerging markets still have work to do to reap a bonanza from the structural opportunities. For instance, enhancing policy visibility will be critical in attracting investments into these developing trends,” the S&P added.
