The S&P says the near-term economic outlook for India is for "continued rapid expansion" during the remainder of 2023 and for 2024, underpinned by strong growth in domestic demand.

The acceleration of foreign direct investment inflows into India over the past decade reflects the favourable long-term growth outlook for the Indian economy, helped by a youthful demographic profile and rapidly rising urban household incomes, says S&P. "India has also become an increasingly attractive location for multinationals across a wide range of industries, with foreign direct investment inflows (FDI) having reached a new record high of USD 85 billion in the 2021-22 fiscal year."

The long-term outlook for the Indian economy, as per S&P, is supported by a number of key growth drivers -- large and fast-growing middle class, which is helping to drive consumer spending; and the rapidly growing Indian domestic consumer market and large industrial sector.

"The digital transformation of India that is currently underway is expected to accelerate the growth of e-commerce, changing the retail consumer market landscape over the next decade. This is attracting leading global multinationals in technology and e-commerce to the Indian market."

S&P says by 2030, 1.1 billion Indians will have internet access, more than doubling from the estimated 500 million internet users in 2020.

The ratings agency says overall, India is expected to continue to be one of the world's fastest-growing economies over the next decade, making India one of the "most important long-term growth markets" for multinationals in a wide range of industries, including manufacturing.

S&P had retained India's FY24 growth forecast at 6% in its September report, citing the slowing world economy, the delayed effect of rate hikes, and the rising risk of subnormal monsoons.

India's GDP growth rate

India set to surpass Japan, Germany to become 3rd largest economy by 2030: S&P