New Delhi

India is on track to become the world’s third-largest economy by 2030, according to a recent report by S&P Global. With its rapid economic growth and expanding middle class, India is set to overtake major economies, trailing only the United States and China.

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It said emerging economies have high ambitions for the next decade and beyond with India aiming to become a $30 trillion economy by 2047, from the current $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.

However, the country's rising population and the pressures it places on infrastructure and resources are key challenges that could hinder long-term sustainability as detailed in a report by the Press Trust of India.

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Economic growth and global positioning

S&P Global's report outlines India's projected economic rise, emphasising its robust industrial sector, growing consumer base, and advancements in technology. The country’s gross domestic product (GDP) is expected to surpass that of Japan and Germany within the next six years, marking a significant shift in global economic dynamics. This would place India just behind the US and China in terms of economic output, cementing its position as a dominant player on the world stage.

The country’s economic ascent has been driven by a combination of government reforms, increased foreign investment, and a youthful workforce eager to capitalise on opportunities in technology and manufacturing. India has already made strides in sectors like pharmaceuticals, information technology, and renewable energy, positioning itself as a key destination for global capital.

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Population growth: Opportunity and challenge

The PTI report further elaborated that, while India's economic future looks promising, S&P Global also highlights the significant challenges posed by the country's rapidly growing population. India recently surpassed China to become the world’s most populous country, and this population boom presents both opportunities and obstacles.

On the one hand, a large population offers a massive labour force and consumer market, giving India a competitive edge in terms of human capital and consumption. However, it also worsens issues related to infrastructure, healthcare, education, and employment. The rapid urbanisation and increasing demand for resources could strain public services and put pressure on the government to address socio-economic disparities.

S&P Global’s report notes that managing the needs of such a vast population will require substantial investments in infrastructure, from transportation to digital networks. The country's policymakers must focus on creating inclusive growth strategies that not only harness the potential of its population but also mitigate risks associated with overpopulation, such as environmental degradation and unemployment.

Global challenges and policy responses

India’s journey to becoming a global economic powerhouse is not without hurdles, particularly in the face of global economic uncertainties. S&P Global’s forecast also accounts for inflationary pressures, global supply chain disruptions, and geopolitical tensions, which could affect the country's economic trajectory.

In response, India has been proactive in formulating policies to strengthen its domestic industries and attract foreign direct investment (FDI). Initiatives like “Make in India” and the push for green energy have further cemented its appeal as an investment destination.

Additionally, the government has ramped up its focus on digital transformation, aiming to bridge the digital divide and expand internet access across rural areas, thereby unlocking new avenues for growth.

Despite these efforts, India must also navigate the complexities of climate change and resource management, which are critical to ensuring long-term sustainability as the country’s population continues to expand.

Hence, India's potential to become the world’s third-largest economy by 2030 is an evidence to its economic resilience and innovation. However, S&P Global’s report serves as a reminder that population growth, while offering tremendous opportunities, presents serious challenges that must be addressed through sound policies and infrastructure development. Balancing economic ambitions with sustainable growth will be key to India’s success in the coming decades.