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With a population of 1.4 billion, India’s GDP is projected to expand significantly, placing it as the fifth largest economy globally. Goldman Sachs Research predicts a 6.3% growth in 2024, driven by macro-economic resilience and reduced vulnerability to external shocks compared to peers in the Asia Pacific region.

Echoing this sentiment, S&P Global’s ‘Global Credit Outlook 2024’ foresees India becoming the third largest economy by 2030, with GDP likely to escalate from 6.4% in 2023 to 7% in 2026. The report emphasizes India’s shift from a service-centric economy to a manufacturing-oriented one, attributing success to skill enhancement and increased female participation, vital for harnessing its demographic dividend.

India’s expanding population fuels workforce participation, boasting an optimal ratio between working-age citizens and dependents. Santanu Sengupta, an economist at Goldman Sachs Research, forecasts India’s dependency ratio to be among the lowest in regional economies over the next two decades.

The country is channeling resources into rural employment programs, bolstering cooking gas subsidies, and extending food subsidy initiatives. Economic growth in 2024 hinges on rising private consumer expenditure, anticipated at 6.5%, and a 6.2% increase in gross fixed investment.

However, Goldman Sachs’ ‘India 2024 Outlook’ report highlights persistent supply-side shocks, particularly in food and oil, likely maintaining headline inflation at 5.1% in 2024—above the RBI forecast of 4.7%. This, coupled with elevated domestic inflation, might compel the RBI to sustain its hawkish guidance and stringent monetary policies until it confidently achieves its 4% target.

In response to Raghuram Rajan’s GDP growth statement, KV Subramanian, IMF’s Executive Director and Former Chief Economic Advisor to the Government of India, remains optimistic, citing the economy’s growth rates of 7.2% and 7.7% in the preceding years.

Contrarily, a study cited by Indo-Asian News Service (IANS) cautions against India’s economic growth trajectory. L.T. Abhinav Surya’s paper from the Centre for Development Studies highlights a sluggish recovery post-pandemic, emphasizing a non-productive sector’s dominance in driving growth, imbalanced investment patterns, and a slow increase in India’s share of world GDP.

The study reveals India’s GDP growth rate between 2019-20 and 2022-23 stood at 3.27%, indicating a tepid recovery from the COVID-19 shock. Despite a robust 7.7% growth in the first half of 2023-24, the average growth rate is a modest 3.65%, raising concerns about high unemployment and rising inflation rates.

Over the last decade, India has witnessed a decline in the primary sector’s (agriculture and related activities) contribution to Gross Value Added (GVA), dropping from 18.5% in 2011-12 to 15.1% in 2022-23. Although the industrial sector could have compensated with substantial productivity growth, its share has plateaued around 22%. Consequently, a strategic recalibration might be imperative for India’s economy to maintain global standing and meet projected growth rates.