Manufacturing, labour sectors key to India retaining its world-beating growth: S&P Global

The key to India’s economic success lies in the country’s ability to become a global manufacturing hub and transform itself from a services-dominated economy to one that is dominated by manufacturing, the agency said in its report

The world is going through an unprecedented period of uncertainty, and India can capitalise on this challenge, says a report by S&P Global titled Look Forward: India's Moment. However, it added, the path to achieve high, stable, and inclusive growth will require visionary decision-making by India in key sectors such as labour and manufacturing.

The data, research, and analytics firm expects India to grow at 6.7 percent per year on an average for eight years starting 2023-24 retaining the tag of being the fastest-growing economy in the world. It sees per capita GDP rising to about $4,500.

The Indian government and the Reserve Bank of India have forecast a GDP growth rate of 6.5 percent for 2023-24 and are bullish about India's prospects.

The agency sees India's short-term economic growth standing on the shoulders of its 678.6 million strong labour force. However, the inclusion of more women in the workforce will be crucial for India's future growth as only 24 percent of women are participating as of 2022.

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"India has an immense opportunity to increase its share of global manufacturing exports, and the government is seeking to raise manufacturing to 25 percent of GDP from 17.7 percent by 2025," the report said.

From balancing to leading power

India seeks to balance its pursuit of high growth and carbon reduction goals, while also guiding other emerging economies on the journey towards net-zero emissions. The South Asian nation will need to adeptly utilise both multilateral and bilateral relationships to become a "leading power" from a "balancing power", the report added.

The key to India's economic success lies in the country's ability to become a global manufacturing hub and transform itself from a services-dominated economy to one that is dominated by manufacturing, the report said, adding that upskilling workers and larger female participation in the workforce would be crucial for the country to take advantage of its demographic dividend.

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India surpassed China in population and is now the most populous country in the world, a United Nations Population Fund (UNFPA) report revealed in April. Experts believe that India's demographic advantage, its young population and the consumer-driven economy will be significant factors in driving the country's development and present an enormous opportunity for its economic growth.