India can become a USD 6.7 trillion economy by 2031, from USD 3.4 trillion currently, if the country clocks an average growth of 6.7 per cent for 7 years, an S&P Global report said on Thursday.
India had clocked a 7.2 per cent GDP growth in 2022-23 fiscal.
But a global slowdown and lagged effect of a policy rate hike by RBI could slow down growth to 6 per cent in the current fiscal, S&P Global said in a report titled 'Look Forward: India's Money'.
"We expect India to grow 6.7 per cent (average) from fiscal 2024 to fiscal 2031, catapulting GDP to USD 6.7 trillion from USD 3.4 trillion in fiscal 2023. Per capital GDP will rise to about USD 4,500," said the report jointly authored by S&P Global Ratings Global Chief Economist Paul Gruenwald, Crisil Chief Economist Dharmakirti Joshi and S&P Global Market Intelligence Chief Economist Asia Pacific Rajiv Biswas.
The macro challenge for India in the upcoming decade is to turn traditionally uneven growth into a high and stable trend, it said.
Capital accumulation will drive India's economy toward this desirable path with the government and increasingly private sector investing in infrastructure and manufacturing, the report said.
"You will see growth peak at around fiscal 2025-26," Joshi said.
The report also said that India will likely see gains from reforms such as Goods and Services Tax. Further, the implementation of the Insolvency and Bankruptcy Code would also help to drive a healthy credit culture.
It said that even with India recalibrating toward manufacturing, services will maintain a strong role in the economy.
The challenge over the next decade and beyond will be to create the conditions for sustained growth and achieving this will likely require structural reforms in 3 key areas -- raise labour participation, especially among women, and boost skills, lift private investment in manufacturing and bolster external competitiveness through FDI, it added.
A massive domestic market, along with gradually improving global competitiveness, is helping India draw foreign investment, the report said.