According to S&P, India’s GDP would rank third by 2030.Based on a strong 6.7% annual growth rate, India’s economy is expected to grow to become the third largest by 2030–2031 (S&P Global Ratings, “Look Forward Emerging Markets: A Decisive Decade”). The issues India faces from population increase are further highlighted in the paper. It also describes the upcoming ten years’ growing market trends.
S&P Global Ratings: What is it?
S&P Global Ratings is an American credit rating organisation (CRA) and a division of S&P Global.It publishes financial research and analysis on stocks, bonds, and commodities.Among the Big Three credit rating agencies, which also include Fitch and Moody’s, it is regarded as the largest.
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What does the report say about the emerging economy ?
The projection also shows emerging nations that will spur the world economy by the next ten years with average GDP at 4.06 percent for 2035 compared to 1.59 percent for advanced nations.
In the emerging markets, by 2035, countries will add up to 65% to the world’s economic growth. Among the most important factors that will spur growth, some again will come from Asia-Pacific emerging markets, in particular, China, India, Vietnam, and the Philippines.
S&P about Indian Economy:
Source: S&P Global Market Intelligence
- Third Largest Economy: 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. Promisingly, the HSBC India Purchasing Managers’ Index, compiled by S&P Global Market Intelligence, shows that India has consistently seen the highest private sector output expansion worldwide over the past year.India is aiming to become a USD 30 trillion economy by 2047, from the current USD 3.6 trillion.
- Internalization of India’s Capital Market: India’s 2024 entry into JP Morgan’s Government Emerging Market Bond Index could provide additional government funding and unlock significant resources in domestic capital markets. India’s inclusion in global bond indexes will encourage sizable foreign inflows to government debt and the country’s primary equity market is outperforming regional peers, with a substantial forward calendar. However, this transformation is expected to be gradual and would require changes in policy across the board. This is only a first step –investors will continue looking for improved market access and settlement procedures.
- Economy & Capital Markets: India is the fastest-growing large economy, with an 8.2% growth rate in FY 2024, above the earlier projections. Ongoing reforms will be critical to business transaction and logistics improvements, boost private sector investments, and wean off the dependence 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: It will be critical for India to lead global governance on technologies such as generative AI, which can be harnessed for
economic growth. India can aim to replicate the success of the digital infrastructure public-private partnership model and S&P Global Ratings data shows significant public investment commitments into its AI sector.Leveraging AI can boost economic growth, with opportunities for public-private partnerships to replicate the success of India’s digital infrastructure.
- Challenges to the Indian Economy
S&P Global Ratings highlights several challenges related to population growth in India, which can impact its economic development and stability. Key challenges include:
The supply of food, energy, and water is being stressed by the world’s fast growing population, which creates problems for resource management. To prevent shortages, these resources must be handled sustainably.
Urbanization: As a result of population growth, there is a risk of overcrowding, poor housing, and increasing pollution, all of which can lower quality of life.
Due to scarcity of jobs, the rate of unemployment and dissatisfaction is probable in the locality.
Infrastructure Development: With the growth of population, massive investment in housing, transport, healthcare, and education is required. The economy cannot be expanded if the infrastructure is also not so sound.
Healthcare Services: Increased population may prove to be a burden on the health sector, which further complicates the management of public health and proper medical aid.
Increased population brings along the chance of overcrowding and thereby poor housing, rise in pollution degrading quality of life.
The above facts require coordinated policy efforts, investment, and long-term planning to bring about long-term sustainable developments in India. India can be seen as becoming the 3rd largest economy in nominal GDP in 2024 from 5th in 2024.
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