Indian Economy To Clock Growth Rate Of 6.8 Per Cent In FY25, Touch $7 Trillion By 2031: CRISIL Ratings

After beating market estimates with a growth rate of 7.6 per cent in FY24, the real GDP for the country is expected to moderate slightly to 6.8 per cent in the upcoming FY25, the ratings agency noted

Regarding the factors posing a challenge to growth, the report stated that near and medium term challenges would arise from geopolitics, climate change, technological disruptions, and an uneven global recovery. 

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Indian economy is projected to clock a GDP growth rate of 6.8 per cent in the 2024-25 fiscal year, a survey by CRISIL Ratings said on Wednesday. The study by the ratings agency estimated that the country is set to become an upper middle-income nation by 2031 and the economy will double to touch $7 trillion. 

Sharing the projections in the India Outlook report, CRISIL Ratings noted that the economy will find support from domestic structural reforms ‘and cyclical levers and can retain -- perhaps even improve -- its growth prospects to become the third largest economy by 2031’. After beating market estimates with a growth rate of 7.6 per cent in the current fiscal year, the real GDP for the country is expected to moderate slightly to 6.8 per cent in the upcoming FY25, the ratings agency noted in its study, reported PTI.

The agency noted that in the upcoming seven fiscal years, the Indian economy will surpass the $5 trillion mark and move towards the $7 trillion milestone. “A projected average expansion of 6.7 per cent in this period will make India the third-largest economy in the world and lift per capita income to the upper-middle income category by 2031,” CRISIL said in the report.

Notably, currently India stands as the fifth largest economy in the world with a GDP of $3.6 trillion, after the US, China, Japan, and Germany. The agency estimated that the Indian economy would expand to touch $6.7 trillion by the 2030-31 fiscal year, and India will become a part of the upper middle-income countries with per-capita income increasing to $4,500 in FY31. 

The World Bank defines lower-middle income nations as the ones with per-capita income ranging from $1,000 to $4,000, while the upper-middle income nations include per capita income between the range of $4,000 to $12,000. 

Elaborating on the findings, Amish Mehta, CEO and MD, CRISIL, stated, “By fiscal 2031, India will be the No. 3 economy and an upper-middle income country, which will be a big positive for domestic consumption. India's manufacturing sector is at a sweet spot due to high capacity utilisation across key sectors, opportunities from global supply-chain diversification, thrust on infrastructure investment, the green-transition imperative and strong balance sheets of lenders. Continuous reforms, enhanced global competitiveness and moving up the value chain will boost the share of manufacturing in India's GDP beyond the projected 20 per cent in fiscal 2031.”

Regarding the factors posing a challenge to growth, the report stated that near and medium term challenges would arise from geopolitics, climate change, technological disruptions, and an uneven global recovery. 

“There is ample opportunity for both manufacturing and services to cater to domestic and global demand. We project manufacturing and services to grow 9.1 per cent and 6.9 per cent, respectively, between fiscals 2025 and 2031. Despite some growth catch-up by manufacturing, services will remain the dominant driver of India's growth,” Dharmakirti Joshi, chief economist, CRISIL said.