According to rating agency CRISIL’s report, the Indian economy is poised to grow rapidly in the coming days. Along with this, in the coming years, India will take strides towards becoming an upper-middle-income country.
Let’s understand the factors that will propel India into the upper-middle-income category and what significance it holds for investors.
What’s Happening?
CRISIL, a leading rating agency, released the Indian Outlook report on March 6, 2024, stating that India’s GDP growth is estimated to remain at 6.8% in FY25 and the economy could reach up to $7 trillion by 2031. Additionally, this growth will be driven by improvements in domestic growth and capital expenditure.
Not only this, but the report also suggests that this growth will make India an upper-middle-income country by 2031.
What Does Upper-Middle-Income Country Mean?
According to the World Bank, countries with a per-capita income ranging from $ 1,000 to $ 4,000 are termed as lower-middle-income countries, while those with a per-capita income ranging from $ 4,000 to $ 12,000 fall under the category of upper-middle-income countries.
In terms of per-capita income, Luxembourg tops the list, while India ranks 140th.
The below table will help you to find information about the top countries based on per-capita income.
This image illustrates the top countries based on per-capita income.
According to the International Monetary Fund (IMF), India’s current GDP per capita income is approximately $ 2,850, placing us in the category of lower-middle-income countries. However, according to CRISIL’s report, it is expected that India’s GDP per capita income will reach $ 4,500 by 2031.
What’s Behind this Expectation?
Several factors will help boost India’s economy:
Government Reforms: Over the past few years, the Indian government has made several reforms to ease doing business and attract investments. These reforms will help boost the economy.
Strong Manufacturing Sector: India’s manufacturing sector is growing rapidly, and CRISIL estimates that it will grow at a rate of 9.1% over the next seven years.
Growing Service Sector: The service sector also plays a vital role in India’s GDP, and it is expected to grow at a rate of 6.9% over the next seven years.
Emerging Sectors: Emerging sectors such as electronics, energy, and electric vehicles (EVs) are growing faster compared to other sectors and will play a crucial role in boosting the economy in the future. Additionally, investments in these sectors contributed 16% to the capital expenditure in 2023 and 2024.
What it Means for Investors?
India’s economy is growing rapidly, bringing several new opportunities for investors. As the economy progresses, the demand for goods and services will increase, benefiting companies and providing them with opportunities to earn higher profits. Consequently, investors are likely to see better returns on their investments.
The Indian economy is growing rapidly, and compared to other countries, India is witnessing the best growth. Therefore, investors can consider it as a positive indicator. Additionally, the report suggests that emerging sectors are growing faster than others, so investors can focus on investing in these sectors.
What’s Next?
Currently, the Indian economy stands at $3.6 trillion, making it the fifth-largest economy in the world after the United States, China, Japan, and Germany. Additionally, CRISIL estimates that by 2031, India’s economy could reach up to $6.7 trillion.
Not only this, CRISIL Chief Economist Dharmakirti Joshi says that in the coming times, both the manufacturing and service sectors will play a significant role in India’s development. However, the manufacturing sector is expected to grow faster compared to the service sector.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The article is for information purposes only. This is not an investment advice.
*Disclaimer: Teji Mandi Disclaimer
