India is poised to be the third largest global economy by 2030 but rising population presents mounting challenges in basic service coverage and growing investment needs to maintain productivity, S&P Global Ratings said on Thursday.
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.
In its report titled 'Look forward Emerging Markets: A decisive decade', S&P said emerging markets will play a crucial role in shaping the global economy over the next decade, averaging 4.06 per cent GDP growth through 2035, compared to 1.59 per cent for advanced economies.
By 2035, emerging markets will contribute about 65 per cent of global economic growth.
This growth will be driven mainly by emerging economies in Asia-Pacific, including China, India, Vietnam and the Philippines.
"Also by 2035, India will be cemented as the world's third-largest economy, with Indonesia and Brazil ranking eighth and ninth, respectively," S&P said.
India, it said, has also taken measures to improve its weak fiscal flexibility by boosting its capital expenditure, further supporting long-term growth.
But population challenges are meaningful, with the country expected to have the world's largest population by 2035.
This presents mounting challenges in basic service coverage and growing investment needs to maintain productivity, S&P said.
Stating that India is positioned to grow its economy in the next decade, the US-based agency said as the next decade approaches, the economic trajectory of emerging markets will likely be heavily influenced by their governments' design and execution of long-term growth strategies.
"Establishing ambitious long-term growth goals provides a clear roadmap for progress.
"These goals indicate that policymakers are planning for the future, identifying vulnerabilities and prioritizing strategic areas to mobilise capital and investment alongside the private sector," S&P added.
