Crisil Ratings, an Indian rating agency, forecast a 6.8 per cent growth in India’s GDP for the upcoming fiscal year. Their India Outlook report predicts the country’s economy will benefit from domestic reforms and cyclical trends, potentially solidifying its position as the world’s third-largest economy by 2031.
The report acknowledges a projected moderation from the current fiscal year’s growth of 7.6 per cent, with the real GDP growth estimated to settle at 6.8 per cent in fiscal 2025. However, Crisil anticipates a significant expansion over the next seven fiscal years, propelling the Indian economy past the USD 5 trillion mark and nearing USD 7 trillion by 2031.
Additionally, this projected average growth of 6.7 per cent throughout this period would elevate India to the world’s third-largest economy and raise its per capita income to qualify as upper-middle income by 2031. Currently, India stands as the fifth largest economy globally, with a GDP of USD 3.6 trillion, following the United States, China, Japan and Germany. Crisil expects this figure to increase to a substantial USD 6.7 trillion by fiscal 2031.
The report highlights fiscal 2031 as a pivotal year, signifying India’s entry into the upper-middle income category with a projected per capita income exceeding USD 4,500. The World Bank classifies lower-middle-income countries as those with a per capita income ranging from USD 1,000 to USD 4,000, while upper-middle income falls between USD 4,000 and USD 12,000.
Further, Amish Mehta, Managing Director and CEO, Crisil emphasised the positive impact this growth will have on domestic consumption. He stated, “By fiscal 2031, India will be the number three economy and an upper-middle income country, which will be a significant positive for domestic consumption.”
The report acknowledges potential challenges to this optimistic outlook, including geopolitical tensions, a sluggish global recovery, climate change and technological disruptions. It also anticipates a near-term focus on fiscal consolidation, with a diminishing role for government capital expenditure and a potential rise in private sector investment.
Crisil identifies emerging sectors like electronics, electric vehicles and those heavily involved in the energy transition as key drivers of growth. These sectors are estimated to contribute 16 per cent of the incremental capital expenditure in fiscal years 2023 and 2024.
The report’s optimistic conclusion indicates that both the manufacturing and service sectors will help to create a stronger growth trajectory in the upcoming fiscal year, 2031. Dharmakirti Joshi, Chief Economist, Crisil, highlighted how both industries have plenty of opportunity to meet both local and international demand. Between the fiscal years 2025 and 2031, he predicted that manufacturing and services will increase at 9.1 per cent and 6.9 per cent, respectively.
Additionally, India’s economy is expected to be driven primarily by services even while manufacturing is predicted to rise at a faster rate.
