India is poised to become the world's third largest economy by 2030, as the country has taken effective measures to improve its weak fiscal flexibility by boosting its capital expenditure, according to an analysis. 

In its latest report titled 'Look forward Emerging Markets: A decisive decade', credit rating agency S&P Global said that emerging markets including India is expected to play a pivotal role in shaping the global economy over the next decade, witnessing a gross domestic product growth of 4.06 percent through 2035, compared to 1.59 per cent for advanced economies.

India's Economic Growth and Population Challenge

"India is poised to be the fastest-growing major economy over the next three years and the third largest globally by 2030. Its 2024 entry into JP Morgan's Government Emerging Market Bond Index could provide additional government funding and unlock significant resources in domestic capital markets," said S&P Global. 

It added: "This is only a first step - investors will continue looking for improved market access and settlement procedures." 

The report added that the rising population in India is one of the key factors which should be addressed as the country progresses economically and socially.

"Population challenges are meaningful, with the country expected to have the world's largest population by 2035. This presents mounting challenges in basic service coverage and growing investment needs to maintain productivity," said the US-based agency. 

An Outlook of Emerging Economies

According to S&P Global, emerging markets will play a crucial role in shaping the global economy, contributing about 65 percent of global economic growth by 2035, with nine key emerging markets ranking among the 20 largest economies. 

The report added that despite the mounting growth of these emerging economies, per capita income in these countries will remain well below that of advanced economies. 

S&P Global further pointed out that supportive demographics and technological developments could boost emerging markets' productivity and, consequently, economic growth. 

The analysis added that the energy transition and supply chain relocation will give these economies opportunities to leverage their abundant natural resources, ample workforce and manufacturing capabilities. 

"Emerging markets are strategically positioned to drive global economic growth through the expansion of their domestic markets and to benefit from the reconfiguration of supply chains, trade and investment." said Yann Le Pallec, executive managing director, head of global rating services at S&P Global. 

However, emerging markets will also face a complex global landscape with geopolitical disruptions, climate change risks, and the resurgence of industrial policies and protectionism in advanced economies. 

This intricate environment will present both emergent opportunities and multifaceted challenges for emerging markets as they strive to accelerate their advancement, the report concluded.