India to grow at 6.8 pc in FY’25, to become upper middle-income country by 2031: Crisil Ratings

New Delhi, March 6

Crisil Ratings on Wednesday projected India’s GDP growth at 6.8 per cent in the next fiscal and said the country will become an upper middle-income nation by 2031 with the economy doubling to USD 7 trillion.

In its India Outlook report, Crisil said the Indian economy will take support from domestic structural reforms and cyclical levers and can retain—perhaps even improve—its growth prospects to become the third largest economy by 2031.

“After a better-than-expected 7.6 per cent this fiscal, India’s real GDP growth will likely moderate to 6.8 per cent in fiscal 2025,” said the Crisil India Outlook report.

It said that the next seven fiscals (2025-2031) will see the Indian economy crossing the USD 5 trillion-mark and inching closer to USD 7 trillion.

“A projected average expansion of 6.7 per cent in this period will make India the third-largest economy in the world and lift per capita income to the upper-middle income category by 2031,” Crisil said.

India, with a GDP size of USD 3.6 trillion, is currently the fifth largest economy in the world, after the US, China, Japan and Germany.

Crisil expects the economy to expand to USD USD 6.7 trillion by fiscal 2031.

Fiscal 2031 will mark the year when India enters the club of upper middle-income countries with per-capita income rising to USD 4,500, Crisil said.

As per World Bank definition, lower-middle income countries are those with per-capita income of USD 1,000-4,000, and upper-middle income countries are those with per capita income between USD 4,000-12,000.

Crisil Managing Director and CEO Amish Mehta said, “By fiscal 2031, India will be the No. 3 economy and an upper-middle income country, which will be a big positive for domestic consumption.” India’s manufacturing sector is at a sweet spot due to high capacity utilisation across key sectors, opportunities from global supply-chain diversification, thrust on infrastructure investment, the green-transition imperative and strong balance sheets of lenders.

“Continuous reforms, enhanced global competitiveness and moving up the value chain will boost the share of manufacturing in India’s GDP beyond the projected 20 per cent in fiscal 2031,” Mehta said.

Crisil report said near- and medium-term challenges to growth outlook would come from geopolitics, slowing potential growth from an uneven global recovery, climate change and technological disruptions.

The report said the near term will be characterised by fiscal consolidation, with the gradually receding role of government capex and expectations of the baton being taken up by the the private sector.

Emerging sectors, which are growing faster than others, are electronics, EV, and energy transition-intensive and they account for 16 per cent of the incremental capex in fiscals 2023 and 2024.

Through fiscal 2031, both cylinders of the economy—manufacturing and services—will fire, yielding a sturdier growth path.

Crisil Chief Economist Dharmakirti Joshi said there is ample opportunity for both manufacturing and services to cater to domestic and global demand.

“We project manufacturing and services to grow 9.1 per cent and 6.9 per cent, respectively, between fiscals 2025 and 2031. Despite some growth catch-up by manufacturing, services will remain the dominant driver of India’s growth,” Joshi said.