Key Takeaways

  • India will be the fastest growing major economy in 2023

    and is set to become the fourth largest economy in the

    world in the 2030s, buoyed by its favourable

    demographics and dynamic service sector.

  • While we see downside risks from demographics for most

    economies’ long-run growth paths, India could outperform

    our expectations given its scope to increase labour force

    participation, its increasingly educated workforce, high

    investment needs, large share of workers still in

    agriculture and the potential to benefit from shifting global

    supply chains.

  • However, to truly become the next Asian tiger economy,

    India needs to accelerate the share of its workforce

    entering productive areas of the economy, namely

    industry and services.

  • For this to occur, more reforms will be needed to

    encourage private sector investment and reduce

    operational costs, while physical infrastructure will also

    need to improve to reduce the costs of doing business.

  • However, we see challenges pushing through major

    reforms – particularly of the agricultural sector - while a

    tendency towards protectionism may cap the pace of

    manufacturing growth.

  • Overall, India is primed to impress – our growth forecast

    is consistent with it becoming one of the major engines of

    global growth. But, without significant reforms, or a more

    meaningful acceleration in sectoral reallocation, it will

    likely fall short of the dynamism seen in the Asian tigers

    who attained advanced economy status in record time.


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