“Report Forecasts Indian Economy to Hit $7 Trillion by 2031”
India’s economy is set to reach the $7 trillion mark by 2031, driven by a robust growth trajectory fueled by capital expenditure (capex) and productivity gains, according to a new report from rating agency CRISIL. The Indian economy is expected to maintain an average medium-term growth rate of 6.7% from fiscal 2025 to 2031, a performance comparable to the pre-pandemic decade’s growth rate of 6.6%.
India’s economy is set to reach the $7 trillion mark by 2031, driven by a robust growth trajectory fueled by capital expenditure (capex) and productivity gains, according to a new report from rating agency CRISIL. The Indian economy is expected to maintain an average medium-term growth rate of 6.7% from fiscal 2025 to 2031, a performance comparable to the pre-pandemic decade’s growth rate of 6.6%.
The CRISIL report also predicts India’s GDP growth will accelerate to 6.8% for the current fiscal year, despite challenges posed by high interest rates and stricter lending norms that are likely to dampen urban demand. Additionally, the government’s fiscal consolidation efforts are anticipated to lead to a somewhat lower fiscal impulse, which could further weigh on growth.
One of the key drivers of India’s growth outlook is an expected surge in capital expenditure, alongside improvements in productivity. This is anticipated to continue boosting the country’s economic potential, although the report notes some risks to its forecasts.
Inflation, based on the Consumer Price Index (CPI), is projected to ease to an average of 4.5% in 2024-25, down from 5.4% in the previous year, largely due to lower food inflation. However, the report highlights potential challenges stemming from weather conditions and geopolitical uncertainties. The impact of excess and unseasonal rains on agriculture remains a concern, with any adverse weather event posing risks to food inflation and agricultural income.
Geopolitical tensions could also disrupt global supply chains, disturb trade, and drive up oil prices, further impacting inflation and input costs, the report adds.
In terms of India’s external economic position, the current account deficit is expected to remain manageable. Despite a slight increase to 1% of GDP during 2024-25, up from 0.7% in 2023-24, the deficit is supported by healthy remittance inflows and strong services exports.
The report also highlights strong export performance, with India’s merchandise exports rising by a significant 17.25% in October 2024 to reach USD 39.20 billion, compared to USD 33.43 billion during the same period last year. This growth in exports comes amid a global trade slowdown, with engineering goods, electronic goods, organic and inorganic chemicals, and textiles showing the strongest growth. The manufacturing sector continues to show resilience, bolstering the country’s export potential.
India’s total exports, including both merchandise and services, amounted to USD 73.21 billion in October 2024, marking a 19.08% growth compared to the same month last year. However, total imports for October 2024 also saw an increase, rising by 7.77% to USD 83.33 billion.
As India moves closer to its ambitious $7 trillion GDP target by 2031, these developments underscore the resilience of the economy, though uncertainties like weather patterns and global political instability remain key risks on the horizon.
Sources By Agencies
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