Business

India leaps to third largest economy by 2030


Beautiful and colorful aerial view of the Mumbai skyline during dusk as seen from Currey Road, on February 16, 2022 in Mumbai, India.

Pratik Chorge | Hindustan Times | beautiful pictures

India is about to overtake Japan and Germany to become the world’s third largest economy Global S&P and Morgan Stanley.

S&P’s forecast is based on projections that India’s annual nominal gross domestic product growth will average 6.3% through 2030. Similarly, Morgan Stanley estimates that India’s GDP has could more than double from current levels by 2031.

Morgan Stanley analysts led by Ridham Desai and Girish Acchipalia wrote in the report: “India has the conditions ready for an economic boom fueled by outsourcing, investment in manufacturing activity. , the energy transition and advanced digital infrastructure of the country”.

“These drivers will make [India] the world’s third-largest economy and stock market by the end of the decade.”

India announces annual growth of 6.3% for the July-September quarter, slightly above the Reuters poll forecast of 6.2%. Earlier, India recorded 13.5% growth from April to June from a year ago, driven by strong domestic demand in the country’s services sector.

Nation achieved a record 20.1% year-on-year growth in the three months to June 2021according to Refinitiv data.

“These drivers will make [India] the world’s third-largest economy and stock market by the end of the decade.”

S&P’s forecast hinges on India’s continued trade and financial liberalization, labor market reforms, and investment in India’s infrastructure and human capital.

“This is a reasonable expectation from India, which has much to ‘catch up’ with in terms of economic growth and per capita income,” said Dhiraj Nim, an economist from Banking Group Research. Australia and New Zealand, told CNBC.

Nim said several of the reforms cited had already been implemented, underscoring the government’s commitment to put more capital expenditures on the country’s annual spending books.

Become a more export-oriented hub

According to S&P analysts, the Indian government has a clear focus on becoming a hub for foreign investors as well as a manufacturing powerhouse and its primary means of doing so is through The program encourages production linkages to promote production and exports.

The so-called PLIS, introduced in 2020, endow to both domestic and foreign investors in the form of tax breaks and permit clearances, among other stimulus measures.

“It is highly likely that the government is counting on PLIS as a tool to make the Indian economy more export-oriented and more closely linked in global supply chains,” the S&P analysts wrote.

Workers handle metal parts at a cooking stove manufacturing plant of GHG Reduction Technologies Pvt in Nashik, Maharashtra, India, on Sunday, November 13, 2022.

Dhiraj Singh | Bloomberg | beautiful pictures

Likewise, Morgan Stanley estimates that the GDP share of India’s manufacturing industry will “increase from 15.6% of GDP now to 21% by 2031” – which implies that manufacturing revenues could increase. tripled from its current $447 billion to about $1,490 billion, according to the Bank.

“MNCs are more optimistic than ever about investing in India… and the government is encouraging investment by both building infrastructure and providing land for businesses,” said Morgan Stanley. factory”.

“India’s Advantage” [include] Sumedha Dasgupta, senior analyst at the Economist Intelligence Unit, said: cheap labor is abundant, production costs are low, openness to investment, business-friendly policies and a young population with propensity to consume. strong use.

These factors make India an attractive choice for setting up manufacturing hubs until the end of the decade, she said.

Risk factors

Highlights that could challenge Morgan Stanley’s forecasts include a prolonged global recession, as India is a trade-dependent economy with nearly 20% of its output exported.

Other risk factors cited by the US investment bank include skilled labor supply, adverse geopolitical events and policy errors that could arise from voting in a “government” weaker”.

Global recession could dampen India’s export business prospects, India’s finance ministry said Last Thursday.

Sonal Varma, chief economist at Nomura, said that although India’s total GDP is already above pre-Covid levels, future growth will be “much weaker” than in previous quarters.

“Real GDP is 8% above pre-Covid levels in terms of growth…but in terms of the future outlook, there are headwinds from global financial conditions,” Varma told Squawk Box. by CNBC on Thursday, also warning that there will be a cyclical slowdown ahead.

Similarly, Nim also suggested that human capital investment could be prioritized through education and health.

“This is especially important for the post-pandemic economy, where greater disruption to the informal sector means increased economic and poor inequality,” he said. , while adding that declining labor force participation rates, especially among women, are worrisome.

news7g

News7g: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button