ECONOMIC India surges as China stalls: A tale of two...

India surges as China stalls: A tale of two Asian giants on the global stage | India News


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NEW DELHI: In a significant development for the global economy, S&P Global Ratings has forecasted that India is on a trajectory to become the world’s third-largest economy by 2030. This growth is underpinned by a combination of demographic advantages, policy initiatives, and a shift in the global economic landscape. As India positions itself to surpass its current ranking as the fifth-largest economy, it faces the challenge of transitioning from a service-dominated to a manufacturing-dominated economy.This shift is crucial for India to harness its full economic potential and make a substantial impact on the global stage.
What’s happening: S&P Global Ratings projects India to emerge as the world’s third-largest economy by 2030, surpassing its current fifth position. This growth trajectory positions India as the fastest-growing major economy over the next three years.
Why it matters: India’s rise as an economic powerhouse is significant in the global economic landscape, especially as it contrasts with China’s slowing growth. The country’s transition from a service-dominated to a manufacturing-dominated economy is seen as a critical factor in this growth.
By the numbers: India’s GDP is expected to grow at 6.4%-6.8% this fiscal year, accelerating to 7% by 2026. In contrast, China’s growth is projected to slow to 4.6% by 2026.
Market momentum: India’s benchmark indexes, the NSE Nifty 50 and S&P BSE Sensex, have hit record highs this week, buoyed by Bharatiya Janata Party’s win in 3 out of 5 assembly elections. Banks and public sector stocks have seen significant gains, with foreign portfolio investors turning buyers.
Market milestones: India’s stock market is on the brink of reaching a $4 trillion valuation, driven by retail trader investments and foreign inflows. The Nifty 50 Index has seen substantial gains, reflecting investor confidence in the Indian economy.

Driving the growth: Key factors contributing to India’s economic expansion include a booming domestic digital market and a growing startup ecosystem, particularly in financial and consumer technology. The automotive sector in India is also poised for growth.
Challenges ahead: Transforming India into a global manufacturing hub hinges on developing a robust logistics framework and enhancing workforce skills, including increasing female participation.

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Demographic advantage: India’s young population, with over half under the age of 30, presents a significant opportunity for economic growth.
Global context: India’s economic resilience and growth stand out amid global slowdowns, attracting attention from global investors and companies seeking alternatives to China.
Political landscape: Next year’s Lok Sabha in India and other emerging markets in 2024 could impact investor sentiment and policy predictability, crucial for sustaining investment and growth. A win for PM Modi-led BJP in the 2024 Lok Sabha elections is further likely to boost investor sentiment and may attract record foreign inflows.
Contrasting China: Moody’s Investors Service has cut its outlook for Chinese sovereign bonds to negative, highlighting concerns about China’s debt levels and economic challenges.


Moody’s recent reassessment of China’s economic outlook is in response to the country’s escalating real estate crisis, prompting a shift towards fiscal stimulus. This situation has led to increased borrowing by the Chinese government, aiming to support the economy but also raising alarms over the nation’s escalating debt. Beijing is expected to reach a historic high in bond issuance this year.
“Considering the policy challenge posed by local government debt, the central government is focused on preventing financial instability,” Moody’s commented. The agency also noted the difficulty in balancing financial market stability, avoiding moral hazard, and managing the fiscal costs of such support.


The bottom line: India’s economic ascent is marked by its potential to become a global manufacturing hub and its burgeoning digital and startup sectors. However, realizing this potential requires strategic policy decisions, workforce development, and navigating the global economic and political landscape.
(With inputs from agencies)
Watch More trouble for Xi Jinping: Moody’s cuts China’s credit outlook to negative over fiscal stimulus concerns


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