Indian economy to be 3rd largest by 2030-31, growing 6.7% annually: S&P Global's forecast

"India's medium-term prospects are healthy and filled with opportunities in multiple sectors including trade, agriculture, and AI, likely structural reforms, and growing energy demands. India is poised for growth, and with a young and dynamic workforce well-positioned to shape the global economic landscape," said Abhishek Tomar, Head of the S&P Global India Leadership Council, reported Moneycontrol.

S&P Global also predicted that the Indian economy would expand by 6.8% in the current fiscal year. The economy grew 6.7% in the first quarter, driven by steady manufacturing activity and an uptick in the services sector.

In the first edition of its report titled India Forward: Emerging Perspectives, the global research firm emphasized the need for ongoing reforms to boost private investment and reduce dependence on public capital.

Public capital expenditure (capex) has largely fuelled India’s investment surge, and public capex is expected to grow in double digits in FY25.

The report highlighted the importance of developing infrastructure and geopolitical strategies to maximize trade opportunities.

It also encouraged India to pursue sustainable energy alternatives to meet the needs of its growing population.

"Addressing the twin challenges of air pollution and climate change will help deliver a high-quality, high-growth economy to the world’s largest democracy," the report stated.

It underscored the potential of leveraging artificial intelligence (AI) to further enhance growth prospects. "The equity markets are expected to stay dynamic and competitive due to strong growth prospects and better regulation. Foreign inflows into Indian government bonds have surged since the country joined major emerging market indexes, with further growth anticipated," according to S&P Global.

The report also addressed the challenge of rising food inflation, which could temper consumption. "Equally important is the limiting of food inflation by addressing structural bottlenecks and climate risks, as well as fostering conditions for supportive monetary policy," the report said.

India's food inflation increased again in August, causing overall inflation to rise to 3.65%, slightly up from 3.6% in the previous month.