India is projected to outpace the G7 countries in GDP growth by 2030, driven by strong macroeconomic fundamentals, policy-driven capital expenditure, and rising rural demand. Several reports and analyses suggest that India is poised to become a leading engine of global economic expansion in the coming years.

Key Growth Drivers

• Strong Macroeconomic Fundamentals: India's economic growth is underpinned by its robust macroeconomic environment. FocusEconomics Consensus forecasts project India's economic growth to exceed 6% annually for the remainder of the decade, positioning it among the fastest-growing economies in Asia and worldwide.
• Policy-Driven Capital Expenditure: Increased public investment is expected to play a significant role in India's growth story. Central and state capital expenditure is projected to rise, supported by liquidity infusion from the Reserve Bank of India through phased CRR cuts.
• Rising Rural Demand: A resurgence in rural consumption is contributing to India's domestic growth. FMCG demand in rural areas is growing at a faster pace than in urban markets, signaling deep structural changes and narrowing the rural-urban expenditure gap.
• Demographic Advantage: India has a demographic advantage with a large and growing working-age population. The country is forecast to add a substantial number of people to its workforce over the next decade, becoming the most populous country in the world.
• Digitalization and Financialization: Digitization has enhanced productivity, while financialization has reduced the parallel economy, contributing to economic growth.
• Shift to Clean Energy: India's transition to clean energy is expected to increase efficiency and support its growth trajectory. The country is making strides in renewable energy capacity addition, particularly in solar and wind power.

India's Rising Share in Global GDP

India is expected to contribute over 15% of incremental global GDP between 2025 and 2030, surpassing any single G7 nation. This growth far outpaces the projected contributions of Japan and Germany, highlighting a shift in global economic power. Equirus projects India's GDP to nearly double by fiscal year 2030-31, reaching over US $7 trillion from US $3.6 trillion in fiscal year 2023-24. This would elevate India to the third-largest economy globally.

Comparison with G7 Countries

While the G7 nations are considered the world's most advanced economies, their average growth rate is estimated to be around 1%. In contrast, India's projected growth rate is significantly higher, positioning it as a leader in economic expansion.

The International Monetary Fund (IMF) projects that the UK will have higher GDP growth than the other three European G7 economies (France, Germany, and Italy) in 2025 and 2026. Longer range projections also show the UK is projected to be the fastest growing European G7 economy each year until 2030.

Challenges and Opportunities

Despite its strong growth prospects, India faces challenges, including:

• Poverty and Income Disparity: Despite GDP growth, India's GDP per capita remains significantly lower than G7 countries, indicating wealth disparities.
• Infrastructure Development: Improving infrastructure remains a key priority for sustaining long-term growth.
• Trade Liberalization: Pursuing trade deals with major economies can provide a fillip to foreign investment and boost overseas access for Indian firms.

However, India's strengths, such as market opportunities, a favorable macroeconomic environment, and policy support for manufacturing investment, position it well for future growth. The country is also benefiting from improvements in various sectors, including IT services, pharmaceuticals, and automotives.

Conclusion

India is on a trajectory to outpace the G7 countries in GDP growth by 2030, driven by a confluence of factors, including strong macroeconomic fundamentals, policy reforms, and a demographic advantage. While challenges remain, India's economic potential and strategic shifts in the global landscape position it as a key player in the future of the world economy.