According to a report by S&P Global Ratings, India’s economy will continue to grow at the fastest rate among major economies for the next three years, positioning it to become the third largest in the world by 2030.
India’s economy, which is currently the fifth largest in the world, is predicted by S&P to grow at a rate of 6.4% in this fiscal year and 7% in the following fiscal year. On the other hand, it projects that China’s GDP will contract from an estimated 5.4% this year to 4.6% by 2026.
According to data released last week, India’s gross domestic product (GDP) increased by more than 7.6% in the second quarter of fiscal 2024, exceeding expectations. This led to several brokerages raising their full-year estimate.
Nevertheless, S&P, which had already increased its prediction prior to the release of the most recent data, stated that the success of India’s shift from a services-to-manufacturing-dominated economy will determine how fast the country grows.
In its December 4 Global Credit Outlook 2024 report, S&P stated, “A paramount test will be whether India can become the next big global manufacturing hub, an immense opportunity.”
Manufacturing still accounts for about 18% of GDP, despite the fact that Prime Minister Narendra Modi’s administration has been promoting domestic manufacturing through the “Make in India” campaign and production-linked incentives (PLIs).
On the other hand, more than half of India’s GDP is made up of services.
According to S&P, for India to become a manufacturing hub, it is imperative to establish a robust logistics framework. Additionally, the country must increase the percentage of women in the workforce and “upskill” its labour force in order to realise its “demographic dividend.”
With almost 53% of its population under 30, India has one of the youngest working populations globally.