India poised to overtake Japan as third-largest economy by 2030
India's nominal GDP is forecasted to nearly double, from $3.6 trillion in fiscal 2023-24 to surpassing $7 trillion by fiscal 2030-31.
According to a recent report by S&P Global Market Intelligence, India is anticipated to emerge as the third-largest economy globally by the fiscal year 2030-31. This remarkable shift is projected to be fueled by a strong annual growth rate of approximately 6.7%, nearly double the nation’s nominal GDP from $3.6 trillion in fiscal 2023-24 to over $7 trillion by 2030-31.
Key highlights from the report
India’s nominal GDP is forecasted to nearly double, from $3.6 trillion in fiscal 2023-24 to surpassing $7 trillion by fiscal 2030-31. The country is expected to maintain an average annual growth rate of 6.7% leading up to 2030-31, with an impressive growth rate of 8.2% projected for FY 2024, significantly exceeding the government’s previous estimate of 7.3%.
India’s contribution to global GDP is expected to rise from 3.6% to 4.5%, indicating its growing economic importance internationally. By 2030-31, India is poised to enter the upper-middle-income category, resulting in a substantial increase in per-capita income.
The report highlights potential opportunities across various sectors, including trade, agriculture, and artificial intelligence (AI). With nearly 90% of India’s trade being seaborne, there is a pressing need for enhanced port infrastructure to effectively manage the rising volume of exports and bulk imports. The S&P report notes that only a limited number of Indian ports rank among the top globally, underscoring the necessity for increased investment in both public and private port facilities to improve trade efficiency.
Ongoing structural reforms are considered crucial for enhancing business transactions and logistics, which will, in turn, stimulate private-sector investment and lessen dependence on public capital. Since gaining entry into major emerging market indexes, foreign investments in Indian government bonds have surged, with expectations for continued growth as India’s financial markets remain vibrant and competitive.
The ongoing inflation in food prices presents significant challenges to monetary policy and may limit investment expenditures. The report highlights the critical importance of implementing effective climate risk adaptation strategies to address these issues. It emphasizes that India must enhance its agricultural infrastructure and adopt robust climate risk adaptation measures to secure food availability and maintain economic stability.
The Goods and Services Tax (GST) collections achieved a record high of ₹2.1 trillion in April 2024, reflecting strong economic performance. The HSBC India Composite PMI Output Index has indicated substantial growth, reaching one of its highest points in nearly 14 years, propelled by favorable economic conditions and rising demand.
Moreover, with the increasing domestic energy requirements, there is an urgent necessity for sustainable technologies that ensure energy security while considering environmental impacts. This necessitates investments in renewable energy sources and low-emission fuels.
Abhishek Tomar, the leader of the S&P Global India Leadership Council, highlighted that India’s medium-term outlook is rich with opportunities spanning multiple sectors such as trade, agriculture, and artificial intelligence (AI). He pointed out that the presence of a youthful and dynamic workforce enhances India’s position in the global economic arena.
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