India Post Daily

India is expected to expand at a rate of 6.8% in FY25 and reach upper middle income status by 2031

<p>On Wednesday, Crisil Ratings predicted that India’s GDP would rise by 6.8% in the next fiscal year and that, by 2031, the country’s economy would have doubled to USD 7 trillion, making it an upper-middle-income country.</p>
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<p>According to Crisil’s India Outlook study, the Indian economy can maintain—or perhaps improve—its growth potential to become the world’s third biggest by 2031 with the help of cyclical levers and domestic structural reforms.</p>
<p>The Crisil India Outlook research predicted that India’s real GDP growth will probably slow to 6.8% in fiscal 2025 after a better-than-expected 7.6% this fiscal year.</p>
<p>It predicted that during the following seven fiscal years (2025–2031), the Indian GDP would surpass USD 5 trillion and approach USD 7 trillion.</p>
<p>“A projected average expansion of 6.7 per cent in this period will make India the third-largest economy in the world and lift per capita income to the upper-middle income category by 2031,” Crisil said.</p>
<p>India now has the fifth-largest economy in the world, after the US, China, Japan, and Germany, with a GDP of USD 3.6 trillion.</p>
<p>By fiscal 2031, Crisil projects the GDP to grow to USD 6.7 trillion.</p>
<p>According to Crisil, India will join the group of upper middle-income nations in fiscal 2031 when its per capita income reaches USD 4,500.</p>
<p>By definition, lower-middle income nations have per capita incomes between USD 1,000 and USD 4,000, whereas upper-middle income countries have per capita incomes between USD 4,000 and USD 12,000, according to the World Bank.</p>
<p>“By fiscal 2031, India will be the No. 3 economy and an upper-middle income country, which will be a big positive for domestic consumption,” said Amish Mehta, Managing Director and CEO of Crisil.</p>
<p>Due to high capacity utilisation across important industries, opportunities from global supply-chain diversification, the push for infrastructure investment, the need of the green transition, and solid lender balance sheets, India’s manufacturing industry is in a sweet place.</p>
<p>“Continuous reforms, enhanced global competitiveness and moving up the value chain will boost the share of manufacturing in India’s GDP beyond the projected 20 per cent in fiscal 2031,” Mehta said.</p>
<p>According to the Crisil research, the economic forecast is expected to face short- and medium-term difficulties from geopolitics, uneven global recovery, climate change, and technology upheavals.</p>
<p>According to the paper, the near future will be marked by fiscal consolidation, with the assumption that the private sector would pick up the slack and government capital expenditures will steadily decrease.</p>
<p>Electronics, electric vehicles, and the energy transition are among the rapidly expanding industries that make up 16 percent of the additional capital expenditure in the fiscal years 2023 and 2024.</p>
<p>Manufacturing and services, the two main engines of the economy, will both run strong through fiscal 2031, providing a more stable growth trajectory.</p>
<p>Dharmakirti Joshi, Chief Economist of Crisil, said that there is a lot of room for both services and manufacturing to meet both local and international demand.</p>
<p>“We forecast growth in manufacturing and services to reach 9.1% and 6.9%, respectively, during the fiscal years 2025 and 2031. Joshi predicted that services would continue to be the major engine of India’s economy even if manufacturing does catch up.</p>

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