S&P Global expects India to grow at 6.7 per cent per year from fiscal 2023-24 to fiscal 2030-31, catapulting gross domestic product (GDP) to $6.7 trillion from $3.4 trillion in fiscal 2023. Per capita GDP will rise to about $4,500.

The macro challenge for India in the next decade is to turn traditionally uneven growth into a high and stable trend, S&P Global recently said.

S&P Global expects India to grow at an annual 6.7 per cent for eight fiscals.
The ten-year challenge for India is to turn traditionally uneven growth into a high and stable trend, it said.
India needs to follow its own unique path due to structural differences with East Asian nations.
Capital accumulation and digital infrastructure will be growth drivers.

India needs to follow its own unique path due to structural differences with East Asian nations, it commented in an article. Capital accumulation and digital infrastructure will be growth drivers.

Success will depend on India’s ability to reap its demographic dividend: increase labour force participation, including upskilling; boost private investment, with structural reforms in land, logistics and labour; and increase competitiveness, driven by foreign direct investment, S&P Global noted.

Geopolitics could provide considerable tailwinds, it cautioned.

Capital accumulation will be the dominant driver of growth. Investment as a proportion of GDP reached a 10-year high of 34 per cent in fiscal 2022-23. S&P Global expects the Indian private sector to gradually increase investments given healthy corporate balance sheets.

It expects capital to contribute 53 per cent of India’s 6.7 per cent average GDP growth through the end of the decade. That dwarfs a 17 per cent contribution from labour, the other main factor of production. Increases in productivity will generate 30 per cent of GDP growth.

The growth contribution from productivity will be higher than in previous periods. Even with India recalibrating toward manufacturing, services will maintain a strong role in the economy, S&P Global noted.

The Indian consumer market will more than double by 2031, surging to $5.2 trillion from $2.3 trillion in 2022, according to S&P Global Market Intelligence’s Global Consumer Markets Service.

Services will remain India’s export growth engine. The sector’s share of total exports has already risen to 42 per cent in fiscal 2022-23 from about 30 per cent in fiscal 2011-12. S&P Global expects this trend to continue.

India is, however, failing to take full advantage of its large and growing working-age population and manufacturing’s share of GDP has only risen to about 18 per cent from 15 per cent over the past two decades. By contrast, services’ share has leapt to 55 per cent from 45 per cent.

Manufacturing has been held back by stringent labour laws, subpar logistics and poor infrastructure, S&P added.

Fibre2Fashion News Desk (DS)