S&P Global Market Intelligence predicts that India's digital transformation and expanding middle class will propel the country's economy to the third spot globally by 2030. This would rank it ahead of both Germany and Japan and behind just the United States and China.
From $3.5 trillion in 2022, the economy is projected to grow to $7.3 trillion by the end of the forecast period.
In 2020, India will overtake the United Kingdom as the fifth largest economy in the world.
In a report released earlier this week, S&P Global Market Intelligence's senior economist for Asia Pacific, Rajiv Biswas, praised India's huge and rapidly expanding middle class for its role in fueling consumer spending. To paraphrase one expert, "the retail consumer market landscape in India is expected to change significantly over the next decade as a result of the ongoing digital transformation."
According to the International Monetary Fund, India's economy will grow to $6 trillion in 2028, making it larger than Germany's in 2026 and Japan's in 2027.
India's economy grew by 7.8 percent in the first quarter of fiscal year 24 due to rising domestic demand and government spending.
According to S&P Global Market Intelligence, India's GDP will expand by 6.6% this fiscal year and by an average of 6.3% over the next three fiscal years. Biswas predicted that "the near term economic outlook is for continued rapid expansion during the remainder of 2023 and for 2024," with the strength of this expansion coming from rising demand at home.
According to the company's own high-frequency measures, like the Index of Industrial Production (IIP) and Purchasing Managers' Index (PMI) surveys, the expansion trend should continue.
Recently released figures showed that IIP increased by 10.3% in August, the largest increase in IIP in 14 months. Positive expectations were indicated by the PMI figures for both service and manufacturing firms. In September, service providers expressed the most optimism they have in nine years. Since the beginning of 2023, the manufacturing outlook has been on an upward trend.
Biswas further noted that inflationary pressures have been easing. Inflation in India dropped to 5% in September from 6.8% in August.
According to S&P, India will have the second-largest economy in Asia by the year 2030 because of its population growth and other factors. With a young population and fast increasing urban household incomes, "the acceleration of foreign direct investment (FDI) inflows into India over the past decade reflects the favorable long-term growth outlook," the report concluded.
The $4 billion that India received in FDI in FY04 was roughly 18 times greater than the $71 billion that it received in FY23.
According to Biswas, "large investments from global technology MNCs like Google and Facebook," who are drawn to India by the country's vast and rapidly expanding domestic consumer market, have bolstered India's robust FDI inflows.
He predicted that the increase in internet users from 500 million in 2020 to 1.1 billion in 2030 would foster the development of unicorn businesses, which would in turn entice investment from conglomerates throughout the world.
Investments in "manufacturing industries like autos, electronics, and chemicals as well as services industries like banking, insurance, asset management, healthcare, and information technology" will increase as a result of India's status as the world's "fastest growing economy."
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