India's GDP set to double to $7 trillion, third largest in the world by FY31: S&P

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Last Updated21/09/2024

The size of India’s nominal GDP would nearly double to over US $ 7 trillion by fiscal 2030–31 from US $ 3.6 trillion in fiscal 2023–24, according to S&P Global Market Intelligence projections.

India’s economy is poised for significant growth, with S&P Global Market Intelligence projecting the country's nominal GDP to nearly double, reaching over $7 trillion by fiscal 2030–31, up from $3.6 trillion in 2023–24.
This expansion will position India as the third-largest economy in the world, increasing its global GDP share from 3.6% to 4.5%. Furthermore, India is expected to transition to an upper-middle-income country by 2031 if its projected 6.7% annual growth is sustained.
In fiscal 2024, India recorded an impressive 8.2% GDP growth, surpassing initial estimates of 7.3%, further solidifying its status as the fastest-growing large economy. S&P anticipates a slight moderation to 6.8% growth in the current fiscal year due to a high base effect from the previous year.

The continuation of structural reforms aimed at improving business transactions and the logistics sector is expected to bolster private sector investment, reducing the economy's reliance on public capital expenditure.
Foreign investments, particularly in government bonds, are expected to rise as India continues to integrate with major emerging market indexes. Equity markets are also projected to remain competitive and dynamic due to the country's strong growth prospects and better regulation.

While India is set on a path of rapid economic expansion, certain challenges persist. High food price inflation, exacerbated by climate change, may pose a constraint on monetary policy, making investments more expensive. To mitigate these risks, enhancing climate adaptation and developing infrastructure in agriculture are crucial.
Furthermore, geopolitical strategies and robust port infrastructure are vital for optimizing India’s seaborne trade, which accounts for nearly 90% of its total trade.

India’s fiscal performance remains robust, with GST collections hitting an all-time monthly high in April 2024, and continued healthy collections in May and June.
This is driven by strong activity in the manufacturing and services sectors, reflected in the HSBC India PMI, which shows a consistent trend of expansion, supported by capacity growth, demand, and productivity gains.
Despite these positive indicators, the Reserve Bank of India’s interest rate hikes between May 2022 and February 2023 are expected to have a moderating effect on demand in 2024–25.
Additionally, regulatory measures to curb unsecured lending are slowing credit growth, and the government's fiscal consolidation efforts will reduce its fiscal stimulus to growth.

Even with these moderating factors, India's growth trajectory remains strong, maintaining its position as the fastest-growing large economy. By continuing structural reforms, improving infrastructure, and addressing climate and inflation risks, India is on course to solidify its standing as a major global economic powerhouse by 2031.