Third-Largest Economy By 2030: How India Can Achieve This Milestone And What Stands In The Way

India is primed to emerge as the world's third-largest economy by 2030. Bolstered by robust economic reforms, a burgeoning young workforce, and a dynamic entrepreneurial landscape, the country's growth trajectory toward this significant global milestone appears increasingly promising. The projection, backed by several economic think tanks and financial institutions, underscores India's remarkable growth potential. As the country navigates a transformative economic journey, key indicators suggest a compelling narrative of progress and dynamism.

Bold Forecasts

S&P Global

US-based rating agency S&P Global recenty said that India to be the fastest growing major economy in the next three years, with GDP growth reaching 7 per cent by 2026, from 6.4 per cent projected expansion in the current fiscal. S&P in its report titled 'Global Credit Outlook 2024: New Risks, New Playbook', said, "India is set to become the third-largest economy by 2030, and we expect it will be the fastest growing major economy in the next three years. A paramount test will be whether India can become the next big global manufacturing hub, an immense opportunity. Developing a strong logistics framework will be key in transforming India from a services-dominated economy into a manufacturing-dominant one."

JPMorgan

James Sullivan, JPMorgan's Managing Director of Asia Pacific Equity Research, pointed out that India can become the world's third-largest economy by 2027, with its GDP more than doubling to $7 trillion by 2030.

World Bank

The IDU, World Bank's flagship half yearly report on the Indian economy, has observed that despite some global headwinds, India was one of the fastest-growing major economies in FY22/23 at 7.2 per cent. The country's growth rate was the second highest among G20 countries and almost twice the average for emerging market economies. This resilience was underpinned by robust domestic demand, strong public infrastructure investment and a strengthening financial sector. Bank credit growth increased to 15.8 per cent in the first quarter of FY23/24 compared with 13.3 per cent in the first quarter of FY22/23.

IMF

Gita Gopinath, chief economist  at International Monetary Fund (IMF), said that India will be the world’s third-largest economy by 2027-28. Speaking about the Indian economy and its performance in the global level, Gopinath said that India will contribute 15 per cent of global growth this year and that it will be a key driver of economic growth in the years to come.

GDP expansion

Indian economy grew 7.2 per cent in 2022-23 fiscal ended March 2023. India's GDP expanded 7.8 per cent and 7.6 per cent in the June and September quarters, respectively. 

The Reserve Bank of India (RBI) upgraded its GDP growth rate estimate for the current financial year to 7 per cent on Friday. While announcing the decisions taken in the Monetary Policy Committee’s (MPC) bi-monthly review meeting, Governor Shaktikanta Das gave a revised GDP growth estimate for FY24, up from the earlier projection of 6.5 per cent. The IMF, World Bank, ADB, and Fitch provided their projections regarding India's GDP growth at 6.3 per cent in FY24, while S&P gave a growth outlook of 6.4 per cent for the current fiscal. 

A major catalyst propelling India's ascent on the global economic stage is its burgeoning population, particularly the significant demographic dividend of a youthful workforce. With over half of its populace under the age of 25, India boasts a demographic advantage that promises a potent engine for economic growth, innovation, and productivity in the coming years.

Manufacturing hubs

Moreover, India's economic policy reforms, aimed at enhancing ease of doing business, attracting foreign investments, and fostering industrial growth, have received accolades from global stakeholders. Initiatives like 'Make in India' and 'Digital India' have played pivotal roles in fostering a conducive environment for both domestic and foreign businesses, stimulating job creation and economic expansion.

Optimism

In the Lok Sabha, Finance Minister Nirmala Sitharaman has said the economy is moving in the right direction, and India has become the fastest-growing major economy in the world. Replying to a debate on Supplementary Demands for Grants, she mentioned that fiscal prudence is the top priority of the government without compromising on social welfare.

Service sector growth

The service sector, a cornerstone of India's economy, has been a robust contributor to its growth story. Information technology, telecommunications, and financial services have exhibited substantial growth, leveraging technology and innovation to carve a niche in the global market.

Furthermore, India's strides in sustainable energy, with ambitious targets in renewable energy adoption, align with global efforts toward a greener future. Investments in solar and wind power projects signal India's commitment to environmentally conscious growth strategies, which resonate with both national and international stakeholders.

Obstacles ahead

However, despite the promising trajectory, challenges persist. Addressing income inequality, bolstering infrastructure development, and navigating geopolitical complexities are among the critical hurdles that India must navigate on its path to economic prominence. Global economic dynamics, including trade fluctuations, geopolitical tensions, and technological disruptions, also pose uncertainties that India must adeptly navigate to solidify its position as the world's third-largest economy.

Nevertheless, the overall sentiment remains optimistic, with economists and analysts expressing confidence in India's potential to overcome obstacles and maintain its growth trajectory. Collaborative efforts among the government, private sector, and civil society will be imperative in steering India toward sustained economic progress and achieving the goal.

At a glance

In conclusion, India's journey toward becoming the world's third-largest economy by 2030 is a testament to its resilience, potential, and capacity for transformation. While challenges loom on the horizon, the nation's strategic reforms, demographic dividend, and innovation-driven economy position it favourably on the global economic map.

As the global landscape evolves, India's ascent signifies a significant milestone not only for the nation but also for the interconnectedness of the world economy, ushering in an era of diversified growth and opportunities. The estimated milestone marks not just an economic accomplishment for India but a momentous shift in the global economic order, signifying the rise of a new economic powerhouse in the 21st century.

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