S&P: India poised to be third largest economy, rising population a concern

India is poised to be the third largest global economy by 2030 but rising population presented mounting challenges in basic service coverage and growing investment needs to maintain productivity, S&P Global Ratings said on Thursday.

It said emerging economies had high ambitions for the next decade and beyond with India aiming to become a USD 30 trillion economy by 2047, from the current USD 3.6 trillion. India is currently the fifth largest economy.

“India is poised to be the fastest-growing major economy over the next three years and the third largest globally by 2030. Its 2024 entry into JP Morgan’s Government Emerging Market Bond Index could provide additional government funding and unlock significant resources in domestic capital markets. This is only a first step —investors will continue looking for improved market access and settlement procedures,” S&P said.

In its report titled ‘Look forward Emerging Markets: A decisive decade’, S&P said by 2035, emerging markets will contribute about 65 per cent of global economic growth. This growth will be driven mainly by emerging economies in Asia-Pacific, including China, India, Vietnam and the Philippines.

“Also by 2035, India will be cemented as the world’s third-largest economy, with Indonesia and Brazil ranking eighth and ninth, respectively,” S&P said. India, it said, had also taken measures to improve its weak fiscal flexibility by boosting its capital expenditure, further supporting long-term growth.

But population challenges are meaningful, with the country expected to have the world’s largest population by 2035. This presented mounting challenges in basic service coverage and growing investment needs to maintain productivity, S&P said.