India's GDP To Grow 6.7% Per Year From FY24 To FY31, Catapulting To $6.7 Trillion Economy: S&P

India's gross domestic product (GDP) to grow 6.7% per year from fiscal 2024 to fiscal 2031, catapulting GDP to $6.7 trillion from $3.4 trillion in fiscal 2023, S&P Global said in its report on August 3rd. Also, the rating agency expects per capita GDP to rise to approximately $4,500. It believes that capital accumulation is the dominant driver of Indian growth.

In its report 'Look Forward: India's Moment', S&P's note said, "We expect India to grow 6.7% per year from fiscal 2024 to fiscal 2031, catapulting GDP to $6.7 trillion from $3.4 trillion in fiscal 2023."

"Capital accumulation will be the dominant driver of Indian growth," the rating agency added.

Investment as a proportion of GDP touched a decade-high of 34% in the financial year FY23. According to S&P, the government has played a key role in boosting investment by offering substantial support for infrastructure projects and by incentivizing manufacturing.

S&P expects the Indian private sector
to gradually increase investments given healthy corporate balance sheets.

Further, the rating agency expects capital to contribute 53% of India's 6.7% average GDP growth through the end of the decade. That dwarf a 17% contribution from labor, the other main factor of production. Increases in productivity will generate 30% of GDP growth.

"The growth contribution from productivity will be higher than in previous periods due to the creation of physical and digital infrastructure in conjunction with efficiency-enhancing reforms. India will likely see further efficiency gains from reforms such as the introduction of the Goods and Services Tax. Further progress in implementing the Insolvency and Bankruptcy Code would also help to drive a healthy credit culture," S&P further said in the report.

Moreover, physical and digital infrastructure enhancements will support growth.

S&P's note added, "Physical infrastructure is improving connectivity and lowering logistics costs for industries. Digital infrastructure will continue to speed innovation, improve payment systems and reduce leakages from government subsidy transfers. Moreover, India has used its G20 presidency to highlight its digital public
infrastructure success and to encourage action on enhancing financial inclusion in other countries."

Also, S&P expects the Indian consumer market to more than double by 2031, surging to $5.2 trillion from $2.3 trillion in 2022.

India's GDP growth came in better-than-expected to 6.1% in the fourth quarter of FY23. Overall, the growth was at 7.2% for the financial year 2022-23.