India to grow at average 6.7% per year from FY24 to FY31: S&P Global

India to grow at average 6.7% per year from FY24 to FY31: S&P Global: The analysis, titled “Look Forward: India’s Moment,” by S&P Global, forecasts India’s economic growth trajectory from fiscal year 2023-24 (FY24) to fiscal year 31 (FY31). The country is set to remain the fastest-growing large economy, with an expected GDP growth rate of 6% in FY24. S&P Global is bullish on India’s prospects, projecting an average annual growth rate of 6.7% during this timeframe, driven mostly by capital expansion. The report envisions India’s GDP to reach $6.7 trillion by FY31, and per capita GDP to rise to approximately $4,500.

Daily Current Affairs Quiz: August 2023

I. India’s Strong Recovery from the Pandemic

India’s GDP growth rebounded impressively at 7.2% in fiscal year 2023 after navigating through the challenges of the pandemic.

II. Capital Expansion as the Dominant Growth Driver

According to S&P Global, capital would contribute considerably to India’s 6.7% average GDP growth over the next decade, with a projected 53% contribution by the end of FY31.

III. The Role of the Private Sector in Investments

While the government has played a pivotal role in boosting investments, the report foresees the private sector gradually increasing its investments due to healthy corporate balance sheets. Various factors, including government intervention through initiatives like the production-linked incentive scheme, will drive private investments.

IV. Challenges and Opportunities for Private Sector Investments

1. Healthy Corporate Balance Sheets: Favorable corporate financials create a conducive environment for increased private sector investments.
2. Government’s Interventionist Investment Strategy: The proactive investment approach of the government, such as the production-linked reward plan, will stimulate private investment.
3. Capacity Utilization: As capacity utilization rises across sectors, it will encourage private investments.

V. Leveraging Demographic Dividend and Increasing Labor Force Participation

India’s 678.6 million-strong labor force will play a crucial role in driving short-term economic growth. Increasing women’s participation in the labor force will be pivotal for sustained growth, given that only 24% were participating in 2022.

VI. Paving the Way to Becoming a Global Manufacturing Hub

India aspires to boost its share of global manufacturing exports and enhance manufacturing’s contribution to GDP to 25% by 2025 in order to safeguard its economic future. A robust logistics framework will be essential in achieving this goal.

VII. The Role of Digital Infrastructure in Driving Growth

Digital infrastructure presents a significant opportunity for high growth. Advancements in technology and connectivity will fuel various sectors of the economy.

VIII. The Need for Structural Reforms

Success in achieving sustained growth will depend on India’s ability to implement structural reforms in land, logistics, and labor. These reforms will enhance competitiveness and attract more foreign direct investments.

IX. Geopolitics as a Tailwind

Favorable geopolitical factors can provide additional support to India’s economic growth prospects.