New Delhi: In a shot in the arm for the Modi government, S&P Global Ratings on Thursday projected India to become the third largest global economy by 2030. The global ratings agency, however, cautioned that the rising population of the country could lead to several challenges in basic service coverage and growing investment needs to maintain productivity.
The agency in its report titled ‘Look forward Emerging Markets: A decisive decade’, said the emerging economies are moving ahead with high ambitions with India setting the target of becoming a USD 30 trillion economy by 2047. The Indian economy is currently at USD 3.6 trillion and is the fifth largest economy in the world. It projected Indonesia and Brazil to become the eighth and ninth largest economy respectively by 2035..
“India is poised to be the fastest-growing major economy over the next three years and the third largest globally by 2030. Its 2024 entry into JP Morgan’s Government Emerging Market Bond Index could provide additional government funding and unlock significant resources in domestic capital markets. This is only a first step –investors will continue looking for improved market access and settlement procedures,” S&P said.
Emerging economies to play crucial role
S&P projected the emerging economies to play a very important role in shaping the global economy over the next decade. It predicted the average growth rate of 4.06 per cent GDP through 2035, as compared to 1.59 per cent for advanced economies.
The global ratings predicted that the emerging markets will contribute about 65 per cent of global economic growth by 2035. It stated that countries in Asia-Pacific region, including China, India, Philippine and Vietnam will drive the growth.
“Also by 2035, India will be cemented as the world’s third-largest economy, with Indonesia and Brazil ranking eighth and ninth, respectively,” S&P said.
India has boosted its capital expenditure in order to improve its weak fiscal flexibility. This would further support the country in its long-term growth, the report mentioned
S&P raised concern over the increasing population of India as the country is expected to have the world’s largest population by 2035. It said the country would have to tackle mounting challenges in basic service coverage and growing investment needs to maintain productivity
The governments’ initiatives and execution of long-term growth strategies would decide the economic trajectory of the emerging markets.
“Establishing ambitious long-term growth goals provides a clear roadmap for progress. These goals indicate that policymakers are planning for the future, identifying vulnerabilities and prioritizing strategic areas to mobilize capital and investment alongside the private sector,” S&P added.
