India, currently the world’s fifth-largest economy, is on track to surpass Japan and become the third-largest global economy, with a projected GDP of $7.3 trillion by 2030, as per the latest report from S&P Global Market Intelligence.
After experiencing two years of rapid economic growth in 2021 and 2022, the Indian economy has maintained strong growth throughout the 2023 calendar year, it added.
India’s gross domestic product (GDP) is expected to grow between 6.2 percent and 6.3 percent in the fiscal year ending in March 2024, making it the fastest-growing major economy in this fiscal year. Notably, India’s economy surged by an impressive 7.8 percent in the April-June quarter.
Positive Near-Term Outlook
S&P Global highlights a positive near-term economic outlook, with continued rapid expansion for the remainder of 2023 and 2024, driven by robust domestic demand, PTI reported.
The Influx of foreign direct investments (FDI) into India over the past decade reflects the country’s favourable long-term growth prospects, bolstered by a youthful demographic profile and rising urban household incomes, it added.
The report forecasts that India’s nominal GDP, measured in USD terms, will rise from $3.5 trillion in 2022 to $7.3 trillion by 2030. This rapid expansion will position India as the second-largest economy in the Asia-Pacific region, surpassing Japan.
By 2022, India had already exceeded the GDP of the UK and France, and by 2030, it is expected to surpass Germany.
As of now, the United States remains the world’s largest economy with a GDP of $25.5 trillion, representing a quarter of the world’s GDP. China holds the second-largest spot with a GDP of approximately $18 trillion, nearly 17.9 percent of the world GDP. Japan follows as the third-largest economy with a GDP of $4.2 trillion, and Germany is fourth with a GDP of $4 trillion.
Long-Term Growth Drivers
S&P Global cites several key drivers supporting India’s long-term economic outlook. These include a rapidly growing middle class, which fuels consumer spending, a booming domestic consumer market, and substantial investments from multinational corporations in various sectors, including manufacturing, infrastructure, and services.
Further, India’s ongoing digital transformation is set to accelerate the growth of e-commerce, reshaping the retail consumer market in the coming decade. This transformation has attracted global technology and e-commerce giants to invest in the Indian market, S&P report noted. The report projects that by 2030, 1.1 billion Indians will have internet access, more than doubling from the estimated 500 million internet users in 2020.
India’s robust FDI inflows, observed over the past five years, continue to gain momentum, even during the pandemic years of 2020-2022. Investments from global technology multinationals (MNCs) and a surge in FDI inflows from manufacturing firms are contributing to this growth, it added
Future Outlook
India is anticipated to remain one of the world’s fastest-growing economies over the next decade, making it a crucial long-term growth market for multinational companies across various industries, from manufacturing to services, including banking, insurance, asset management, healthcare, and information technology.