Standard Chartered projects India as 3rd largest economy by 2030

In coming few years, though India may not be able to sustain its current growth because of high inflation, poor infrastructure, bad governance and volatile oil prices, however in long run Indian economy’s prospect is very good, this was stated by the Standard Chartered Bank, who is quite optimistic on Indian economy in the long run and sees India as emerging a “Winner in the current global super cycle”. However, it also pointed that country’s reform agenda need to be sustained for achieving high growth.

In its Super-Cycle report, Standard Chartered provides a complete picture of the Indian economy and gives a realistic view on challenges faced by the country, however it remains bullish and summing up term India as” tomorrow’s story and today’s opportunity”. Further it says that the Asia’s third largest economy is expected to become the world’s third largest economy by 2030 after China and United States. 

In report bank defines super-cycle as “a period of historically high global growth, lasting a generation or more, driven by increasing trade, high rates of investment, urbanization and technological innovation, characterized by the emergence of large, new economies.” The first sequel of bank’s study which got published last year indicated that there is a super cycle of growth that happens perhaps once in 50 years.

As per the report, currently the world economy is in its third cycle, which started in 2005 and will remain till 2030. The world economy witnessed its first economic super cycle during 1870 to 1913 which saw the emergence of US economy, second super cycle from 1946 to 1973 saw the rise of Japan and East Asia. Now this third cycle is led by the China and India and other emerging economics and is witnessing the shifting of global power from West to East. The economists of the bank are bullish on the India growth story in the long run, though they also argue that challenges for India to achieve good growth numbers way ahead are centered around getting infrastructure (physical and education or skills) and regulatory environment in order. The biggest challenge is to provide job to India’s growing young population for rapid growth and development. If nation is not able to provide employment to its young population, the demographic dividend may turn in demographic disaster. To avoid demographic disaster, India needs to transform its economy from agriculture to industrial economy. At present agriculture is the largest sector in term of providing employment. It provides employment to 52.1% of its labour force and contributes to 15-16% of GDP. To transform economy it is very important that India increase the share of manufacturing sector in GDP with increase capacity of employment generation.

India has an opportunity to regain its prominent position in the world economic order. Though, the economy’s success will depend on how it deals with some of its challenges over the next few decades. Also, there is a need for continued improvement in education, health care and skills as India provides the sizeable educated labour force needed for its private sector to grow, the report added.