S&P Global Ratings projects India's economy to double to $6.7 trillion by 2031, with 6.7% average growth rate

India's economy is projected to achieve significant growth over the next seven years, according to a report by S&P Global Ratings. The report suggests that the Indian economy could double its GDP to $6.7 trillion by 2031 from the current $3.4 trillion, with an average growth rate of 6.7 percent. In FY23, India's GDP recorded 7.2 percent growth, surpassing earlier estimates of 7 percent.

S&P Global's report, titled "Look Forward: India's Money," highlights the potential for India's GDP to reach $6.7 trillion by fiscal year 2031. The rating agency also anticipates India's per capita income to more than double to $4,500. Standard Chartered Bank had previously forecasted a 70 percent increase in India's per capita income, crossing the $4,000 threshold by 2030.

To achieve this growth trajectory, India will need to undertake three crucial structural reforms. First, there is a need to boost labor participation, especially women's participation in the labor force, and focus on skill development. Second, private investment in the manufacturing sector needs to be stimulated. Third, India should enhance its external competition by inviting more foreign direct investment (FDI).

The report emphasizes that capital expenditure will play a crucial role in driving India's economic growth. It expects both the government and the private sector to increase investments in infrastructure projects to fuel the country's progress.

India is poised to benefit from key reforms, including the implementation of the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code (IBC).