India on track to becoming third-largest economy by FY31: S&P Global, says equity markets will stay dynamic

The country is on track to becoming the third-largest economy by 2030-31, driven by a projected annual growth rate of 6.7 percent this fiscal, according to a S&P Global report.

The report, which was released on September 19, also said that with 8.2 percent growth rate in FY2024, continued reforms are crucial to improving business transactions and logistics, boosting private sector investment and reducing reliance on public capital. 

S&P said equity markets are expected to stay dynamic and competitive due to strong growth prospects and better regulation, and foreign inflows into Indian government bonds have surged since the country joined major emerging market indexes, with further growth anticipated. 

The first edition of ‘India Forward: Emerging Perspectives’ report said that India must develop infrastructure and geopolitical strategies, particularly regarding its extensive coastline to maximise trade benefits. 

Nearly 90 percent of India’s trade is seaborne, necessitating robust port infrastructure to manage increasing exports and bulk commodity imports, the report added. 

S&P noted that India faces rising domestic energy demands and suggested that it can tap sustainable technologies, including renewables and low-emission fuels, balancing energy security with its energy transition plans. It said that agriculture will rely on advanced technologies and new policies are needed to improve infrastructure and productivity in the sector. 

The need is to address critical infrastructure issues such as irrigation, storage, and supply distribution to ensure food security and economic stability, it added. 

India’s economy grew at 6.7 percent in the April-June quarter of FY25 over the growth rate of 8.2 percent in Q1 of FY 2023-24. This figure reflects a deceleration from the 7.8 percent growth seen in the previous quarter of FY24 and 8.2 percent in the corresponding period last year. 

“Real GDP has been estimated to grow by 6.7 percent in Q1 of FY 2024-25 over the growth rate of 8.2 percent in Q1 of FY 2023-24,” the finance ministry said in a statement. 

 The latest National Statistical Office (NSO) data stated India’s gross value added or GVA, which is GDP minus net product taxes and reflects growth in supply, also grew 6.8 per cent during April-June 2024. 

The Reserve Bank of India’s forecast was 7.1 percent growth in the first quarter. Analysts predicted growth in the range of 6-7.1 percent for Q1 FY25, compared with 7.8 percent in the previous quarter (Q4 FY24).