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India is set to transition into an upper-middle-income country by fiscal year 2036, with a projected $15 trillion mark by fiscal year 2047, according to India Ratings and Research (Ind-Ra). The rating agency emphasized that sustaining a real GDP growth of 6.25% could facilitate this transition, resulting in a per capita income of $9,218 by fiscal year 2047. Alternatively, a faster growth rate of 8% could propel India to the $15 trillion milestone by fiscal year 2043.

Ind-Ra outlined the pivotal factors influencing India’s economic trajectory, including real GDP growth, inflation (GDP deflator), and the INR/USD exchange rate. Ind-Ra anticipates India entering the upper-middle-income category between fiscal years 2033 and 2036, with the $15 trillion economy goal set for fiscal years 2043 to 2047.

Broader vision

India’s broader economic vision involves becoming a $30 trillion economy by 2047 to attain developed economy status. Ind-Ra economists acknowledge the challenges of achieving a sustained 9.7% annual growth rate, emphasizing that such high growth has been historically rare. The agency estimated a 7.6% expansion in the Indian economy for fiscal year 2024, with expectations of a potential slowdown in the upcoming fiscal year.

Ind-Ra highlighted the importance of global demand and trade support for sustaining a 7% growth rate over a prolonged period. They expressed concerns about restrictive global demand/trade conditions since fiscal year 2012.

Factors shaping India’s transition to a developed economy include an energy transition, emphasis on low-carbon manufacturing and services, and the expansion of the middle class. Rising incomes and the aspirational lifestyle of the middle-income class are identified as growth engines driving demand for a diverse range of goods and services.

Earlier, rating agency CRISIL released a report stating that India’s GDP growth is estimated to remain at 6.8% in fiscal year 2025. The report suggests that India’s economy could reach $7 trillion by 2031, propelling the country into the upper-middle-income category. Key factors supporting this growth include government reforms, a strong manufacturing sector, a growing service sector, and the emergence of sectors like electronics, energy, and electric vehicles.

Investors are expected to find opportunities in India’s rapidly growing economy, with a focus on sectors showing substantial growth potential. As the country progresses towards achieving upper-middle-income status, increased demand for goods and services is anticipated to benefit companies and provide investors with opportunities for higher returns. Currently, India stands as the fifth-largest economy globally, with CRISIL estimating a potential rise to $6.7 trillion by 2031.

  • Published On Mar 13, 2024 at 08:47 AM IST

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