With the rise of the industrial and infrastructure sectors, India will have the fastest-growing G-20 economy over the coming years, but reform and regulatory obstacles may prevent foreign investment, according to global ratings agency Moody's.
According to the report, urbanisation, an expanding number of nuclear families, and a large, youthful and educated labour force will increase demand for homes, cement, and new automobiles. According to the report, with a projected GDP of $3. 5 trillion in 2022, India will be the most populous nation on earth and have the fifth-largest economy worldwide. It also said the government's infrastructure spending will bolster steel and cement sectors, while India’s net-zero commitment will drive investment in renewable energy. Larger production capacity will raise rated companies’ competitiveness in these sectors, a credit positive if they manage execution risks with financial discipline.
“While demand across the manufacturing and infrastructure sectors will grow 3-12% annually for the rest of the decade, India’s capacity will still rank well behind China's by 2030,” Moody’s said. “Leading companies will invest around $150 billion in additional capacity, requiring access to multiple funding sources, but most rated companies can tolerate a rise in debt,” the report said. But it cautioned that bureaucracy could slow approval processes in obtaining licences.