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India is set to become the world’s third-largest economy by 2030, but its growing population presents significant challenges in providing basic services and addressing increasing investment needs to sustain productivity, S&P Global Ratings said on Thursday. 

Currently the fifth-largest economy, India aims to transform into a $30 trillion economy by 2047, up from $3.6 trillion today. Emerging economies like India have ambitious goals for the next decade and beyond.

"India is poised to be the fastest-growing major economy over the next three years and the third-largest globally by 2030," S&P stated.

The country’s upcoming inclusion in JP Morgan’s Government Emerging Market Bond Index in 2024 could provide more government funding and unlock substantial resources in its domestic capital markets.

S&P noted that this is just the beginning, and investors will continue seeking better market access and settlement procedures.

In its report titled 'Look Forward Emerging Markets: A Decisive Decade', S&P highlighted the crucial role emerging markets will play in shaping the global economy over the next decade, with an average GDP growth of 4.06% through 2035, compared to 1.59% for advanced economies. 

By 2035, emerging markets are expected to contribute about 65% of global economic growth, with Asia-Pacific economies like China, India, Vietnam, and the Philippines leading the way.

India will solidify its position as the third-largest economy by then, with Indonesia and Brazil ranking eighth and ninth, respectively.

S&P also noted India’s efforts to boost capital expenditure and improve fiscal flexibility, which will support its long-term growth. However, population challenges remain significant, as India is expected to have the world’s largest population by 2035.

This will strain the country's ability to cover basic services and require increased investment to maintain productivity.

Looking ahead, S&P stressed that the economic trajectory of emerging markets will largely depend on how well their governments design and implement long-term growth strategies.

By setting ambitious goals and mobilizing capital in collaboration with the private sector, policymakers can plan for future growth, address vulnerabilities, and prioritize key areas for development, the agency concluded.