The Indian economy news is promising. According to S&P Global Ratings, the country seems poised to claim the coveted title of the world’s third-largest economy by 2030. With a thriving growth trajectory, the South Asian giant might soon outpace its competitors and secure a prominent position on the global economic stage.
Divergent Paths: Contrasting India and China’s Economic Trajectories
While the country charts an upward trajectory, S&P forecasts a deceleration in China’s economic growth. The report suggests a slowdown to 4.6% by 2026 from an estimated 5.4% this year. This divergence further underscores India’s potential to not only catch up with but surpass its Asian neighbour on the economic front.
Impressive Q2 Performance Fuels Optimism
Recent data revealed a 7.6% growth in India’s Gross Domestic Product (GDP) for the second quarter of fiscal 2024. Moreover, it has ignited optimism in the market. Several brokerages, buoyed by this performance, have already raised their full-year estimates. Despite this positive outlook, S&P emphasizes that sustained growth hinges on India’s successful transition from a service economy to a manufacturing-dominated one.
The Manufacturing Challenge: India’s Pivotal Test
In its Global Credit Outlook 2024 report, S&P also underscores the need for India to become a global manufacturing hub for sustained economic growth. Prime Minister Narendra Modi’s initiatives like the “Make in India” campaign and production-linked incentives have made strides. However, manufacturing constitutes only 18% of the GDP, compared to the over half contributed by the service sector.
The Importance of Logistics and Workforce Development
S&P outlines key prerequisites for India’s ascent in the manufacturing sector. The establishment of a robust logistics framework is paramount, facilitating seamless production and distribution. Furthermore, the report stresses the urgency of “upskilling” the workforce and enhancing female participation in the job market to harness India’s demographic dividend fully.
Demographic Advantage: India’s Youthful Workforce
With nearly 53% of its citizens under the age of 30, India boasts one of the youngest working populations globally. Leveraging this demographic advantage by providing comprehensive skills training and creating a conducive environment for women in the workforce will be instrumental in propelling India to economic preeminence.
