According to a report from S&P Global Ratings, the nation is expected to become the world’s third-largest economy by 2030. However, the agency sounds a warning note that the country’s growing population presents significant challenges in delivering basic services and meets rising investment demands needed to sustain productivity.
Currently the world’s fifth largest economy, India aims to take economic size from about $3.6 trillion to $30 trillion by 2047. S&P expects that India will lead the charge of growth for the major economies over the next three years. The addition of India to JP Morgan’s Government Emerging Market Bond Index is expected to further fortify government funding and tap key sources of capital domestically. In this regard, S&P has pointed out that this is a step only in the beginning where investors clamor for better access to the market as well as settlement procedures.
S&P reported, with the company projecting emerging markets will be vital to global economy in next decade, with average growth in gross domestic product of 4.06 percent through 2035, compared to just 1.59 percent for advanced economies. The S&P predicted that emerging markets will contribute close to 65% of the growth of the global economy up to 2035, mainly driven by countries in the Asia-Pacific region, including India, China, Vietnam, and the Philippines. Coming by 2035, S&P predicted that India will complete its rise as the world’s third largest economy, followed by Indonesia and Brazil in the eighth and ninth positions respectively.
While India is taking steps to make its government more flexible with a rise in capital spending, the population growth will pose massive threats in the near future. According to S&P, India will become the world’s largest-population nation by 2035, and therefore, it will have to make significant spends on the most basic services to continue the productivity rates.
The report stresses the need for governments in emerging markets to formulate and implement growth strategies for the long term. S&P argues that setting ambitious targets for growth is integral in identifying vulnerabilities and mobilizing funds and putting them in place in parallel with investments from the private sector.
