Mumbai: The Indian economy is set to witness significant growth with projections indicating a GDP expansion of 6.8 per cent in the next fiscal year, ratings agency Crisil said on Wednesday. The ratings agency further said that with this growth trajectory, India can attain upper middle-income status by 2031, with the economy expected to double to $7 trillion.
In its India Outlook report, the domestic rating agency said that the Indian economy will take support from domestic structural reforms and cyclical levers and can retain -- perhaps even improve -- its growth prospects to become the third-largest economy by 2031.
"After a better-than-expected 7.6 per cent this fiscal, India's real GDP growth will likely moderate to 6.8 per cent in fiscal 2025," it said.
At present, India's GDP size is $3.6 trillion. It is the fifth largest economy in the world, after the US, China, Japan and Germany. Crisil expects the economy to expand to $6.7 trillion by fiscal 2031.
Interestingly, the next seven fiscals (2025- 2031) will see the Indian economy crossing the $5 trillion mark and inching closer to $7 trillion."A projected average expansion of 6.7 per cent in this period will make India the third-largest economy in the world and lift per capita income to the upper-middle income category by 2031," Crisil said.
As per World Bank definition, lower-middle income countries are those with per-capita income of $1,000-4,000, and upper-middle income countries are those with per capita income between $4,000-12,000.
However there would be near and medium term challenges posed by geopolitics, slowing potential growth from an uneven global recovery, climate change and technological disruptions. “We believe the Indian economy will take support from domestic structural reforms and cyclical levers and can retain — perhaps even improve — its growth prospects,”said Crisil Managing Director and CEO Amish Mehta.
India will be firing on both cylinders — manufacturing and services though services will continue to have a larger footprint. Overall capex is seen growing 9-11 per cent annually over the next four fiscals, with a good mix of the industrial and infrastructure segments due to financial flexibility of India Inc to pursue expansion. Emerging sectors such as electric vehicles (EVs), semiconductors and electronics will dominate investments, driven by market dynamics and global supply-chain diversification. Earlier this week, rating agency Moody's too raised its forecast for India's GDP growth in 2024, pointing at global and domestic optimism in the country's economy on the back of robust manufacturing activity and infrastructure spending.
The rating agency said that faster growth could be achieved by continuing to build infrastructure — both digital and physical — and undertaking growth-enhancing reforms aimed at improving the ease of doing business.
