According to a forecast by S&P Global Ratings, India’s economy would continue to develop at the quickest 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 expected 5.4% this year to 4.6% by 2026.
Data released last week indicated that India’s gross domestic product (GDP) (INGDPY=ECI) increased by a larger-than-expected 7.6% in the second quarter of fiscal 2024, leading some brokerages to increase their full-year projection.
Nevertheless, S&P, which had already increased its prediction before to the release of the most recent statistics, 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 government of Prime Minister Narendra Modi’s pushing of 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 logistical infrastructure. Additionally, the country must raise the percentage of women in the workforce and “upskill” its labour force in order to realise its “demographic dividend.”
With over 53% of its population under 30, India has one of the youngest working populations globally.