NEW DELHI: S&P Global, a research and analytics firm, expects India to grow 6.7% per year in next eight years -- FY24 to FY31 – taking the size of GDP to $6.7 trillion from $3.4 trillion in FY23. It said the per capita GDP will rise to about $4,500.
“Capital accumulation will be the dominant driver of Indian growth. Investment as a proportion of GDP reached a 10-year high of 34% in fiscal 2023. The government has played a key role in boosting investment by offering substantial support for infrastructure projects and by incentivising manufacturing,” said S&P in its journal named “Look Forward: India’s moment”.
It expects private sector to increase investments given healthy corporate balance sheets. “We expect capital to contribute 53% of India’s 6.7% average GDP growth through the end of the decade. That dwarfs a 17% contribution from labour, the other main factor of production. Increases in productivity will generate 30% of GDP growth,” it stated.
As per S&P, growth contribution from productivity will be higher than in the previous periods due to the creation of physical and digital infrastructure in conjunction with efficiency-enhancing reforms. India is likely to see further efficiency gains from reforms such as the introduction of goods and services tax.
Meanwhile, Morgan Stanley has said it is overweight on India as the country is ‘arguably at the start of a long wave boom at the same time as China may be ending one’. Morgan Stanley sees positive demographic trends in India with GDP per capita only US$2.5k per capita (vs. US$12.7k for China), household debt/GDP of just 19% (vs. 48% for China) and only 2% of Indian households having life insurance.