Unfazed by the global slowdown, India's economy is sprinting ahead as the world's fastest-growing major economy, surpassing every estimate with its remarkable pace. The strength of the Indian Economy has prompted domestic and foreign rating giants to hike their growth forecasts. The NSO released figures for the third quarter growth rate, predicting India's economy to grow at 7.6 percent for the fiscal year 2023-24.
Surpassing expectations, the RBI Governor asserted that India's growth rate could inch close to 8 percent. Moody's global rating agency echoed this sentiment, forecasting India's GDP growth at 8 percent. Barclays adds that India's economy will play a more significant role in the global GDP in the coming years, while China's contribution is expected to decline. According to Barclays, China's growth rate is projected to lag behind India's over the next five years.
Growth Rate to Hold at 8% for Five Years
Barclays highlighted India's economic power, projecting an 8 percent growth rate from 2024 to 2028. The report suggests that a single-party majority win in the upcoming general elections will maintain economic policy stability, which could bolster growth with accelerated reforms. After India's growth rate hit 8.4 percent in the October-December quarter, Barclays revised its growth forecast for 2023-24 from 6.7 to 7.8 percent.
India's Global GDP Contribution to Increase
Barclays estimates India's current global GDP contribution at over 10 percent. If India sustains an 8 percent growth rate until 2028, its global GDP contribution could climb to 16 percent. Meanwhile, China's waning growth rate may reduce its global GDP share from the current 33 percent to 26 percent by 2028. This means that India and China could jointly account for over 40 percent of the global GDP, narrowing the gap between their contributions significantly, mirroring India's rising economic stature.
If China's growth hovers around 4-4.5 percent, it could result in a reduction of its contribution to the global GDP from the current 33 percent to 26 percent by 2028. This would be a clear indication of India's bolstering economic strength relative to China.
Indian Economy to Surpass All Projections
Barclays has also made significant claims about the size of India's GDP. If India achieves an 8 percent growth rate by 2028, the Indian economy could expand to 8 trillion dollars, surpassing the earlier projection of 6.6 trillion dollars by 2030. CRISIL's recent report also envisaged India as a 6.7 trillion dollar economy by 2031.
For an 8 percent growth, Barclays advises India to increase its savings rate to 32.3 percent of GDP from the current 30.2 percent. The report also suggests that India should increase its workforce growth to 3.5 percent from the current 1 percent. Moreover, India is advised to boost women's participation in the workforce. To strengthen its position in global exports, India should aim to grow its share from the current 2.4 percent to 4.5-5 percent.
