India is poised to be the third largest global economy by 2030 but rising population presents mounting challenges in basic service coverage and growing investment needs to maintain productivity, S&P Global Ratings said.
It said emerging economies have high ambitions for the next decade and beyond with India aiming to become a $30 trillion economy by 2047, from the current $3.6 trillion. India is currently the fifth largest economy.
"India is poised to be the fastest-growing major economy over the next three years and the third largest globally by 2030. Its 2024 entry into JP Morgan's Government Emerging Market Bond Index could provide additional government funding and unlock significant resources in domestic capital markets. This is only a first step - investors will continue looking for improved market access and settlement procedures," S&P said.
In its report titled 'Look forward Emerging Markets: A decisive decade', S&P said emerging markets will play a crucial role in shaping the global economy over the next decade, averaging 4.06 per cent GDP growth through 2035, compared to 1.59 per cent for advanced economies.
By 2035, emerging markets will contribute about 65 per cent of global economic growth. This growth will be driven mainly by emerging economies in Asia-Pacific, including China, India, Vietnam and the Philippines.
"Also by 2035, India will be cemented as the world's third-largest economy, with Indonesia and Brazil ranking eighth and ninth, respectively," S&P said.
Abhishek Tomar, Head- S&P Global India Leadership Council and Chief Data Officer for S&P Global Market Intelligence said, “India’s medium-term prospects are healthy and filled with opportunities in multiple sectors including trade, agriculture, and AI, likely structural reforms and growing energy demands. India is poised for growth, and with a young and dynamic workforce well-positioned to shape the global economic landscape.”
Key highlights include:
Economy & Capital Markets: India is the fastest-growing large economy, with an 8.2% growth rate in FY 2024, surpassing earlier estimates. Continued reforms are crucial to improving business transactions and logistics, boosting private sector investment, and reducing reliance on public capital. The equity markets are expected to stay dynamic and competitive due to strong growth prospects and better regulation. Foreign inflows into Indian government bonds have surged since the country joined major emerging market indexes, with further growth anticipated.
Geopolitical Strategy & Trade: To maximize trade benefits, India must develop infrastructure and geopolitical strategies, particularly regarding its extensive coastline. Nearly 90% of India’s trade is seaborne, necessitating robust port infrastructure to manage increasing exports and bulk commodity imports.
Energy and Agriculture: India faces rising domestic energy demands and can look to sustainable technologies, including renewables and low-emission fuels balancing energy security with its energy transition plans. Agriculture will rely on advanced technologies and new policies to improve infrastructure and productivity. The need is to address critical infrastructure issues such as irrigation, storage, and supply distribution to ensure food security and economic stability.
AI and Digitalization: Leveraging AI can boost economic growth, with opportunities for public-private partnerships to replicate the success of India’s digital infrastructure.
