'India can become a 7 trillion dollar economy by 2031' – Brokerage gave the main reasons for this

Read Desk. India is set to touch an important economic milestone, with projections indicating that the country could achieve a GDP of $7 trillion by FY31. According to a detailed macroeconomic report by Fisdom Research, this ambitious forecast is being driven by a combination of structural enabling conditions, policy initiatives and favorable macroeconomic conditions.

Major factors promoting India's development

1. consumption and investment growth

India's growth story is based on its growing consumption and stable investment flows. Financialization of savings has gained momentum, with household equity holdings currently at only 5%, providing ample room for expansion. Additionally, increasing urbanization and higher disposable incomes have boosted consumption trends.

2. policy reform

India has implemented major supply-side reforms over the past decade that are now yielding results. Programs such as the Production Linked Incentive (PLI) Scheme, Real Estate (Regulation and Development) Act (RERA) and Gati Shakti National Master Plan have enhanced infrastructure and manufacturing capabilities, creating an enabling environment for sustainable growth.

3. surge in capital expenditure

There has been a significant increase in public capital expenditure, from ₹2 trillion in FY15 to an estimated ₹11 trillion in FY25. This trend is expected to continue, leading to infrastructure development and private sector participation. Corporate capital expenditure is also at a 12-year high, with capacity utilization reaching almost 75%.

4. housing upcycle

India's housing sector is witnessing strong growth, with an estimated compound annual growth rate (CAGR) of 10% over the next five years compared to 5% in the last decade.

5. expansion of service area

The services sector, especially IT and professional consulting, is driving India's export growth. Services exports are expected to grow from $53 billion in 2005 to $338 billion in 2023, accounting for 4.6% of the global market. Diversification into emerging sectors such as fintech and digital services is expected to maintain this momentum.

6. corporate deleveraging

Corporate balance sheets are healthier than ever, with leverage ratios at a 15-year low.

Comparison with China's economic rise

India's current situation is often compared to the rise of China in the mid-2000s. In 2007, China overtook Britain to become the world's fifth largest economy, later overtaking Germany and Japan. India, which recently displaced Britain, is projected to overtake Germany and Japan by 2028, indicating its strong growth potential.

Opportunities and Challenges

opportunity:

digital transformation

With increased agricultural income and government support, rural demand is expected to grow strongly, which will complement urban consumption.

Middle income transition, India is on track to achieve per capita income of $4,500 by FY31.

Challenges:

Geopolitical tensions, inflationary pressures and adverse global financial conditions pose risks to growth.

Import-export imbalance

decline in urban demand

the way forward

India's services sector is expected to maintain its growth momentum due to strong domestic and international demand. However, manufacturing is facing challenges from rising cost pressures, including inflationary trends in input costs. Strategic policy interventions and reducing inflation can help stabilize growth in both sectors, thereby ensuring a balanced and resilient economic expansion.