In order to surpass China as the largest contributor to global GDP, India needs to aim for an annual economic growth of 8% and increase investments in well-established industries like mining, utilities, transport, and storage, according to a report released on Tuesday by Barclays Plc.

According to Rahul Bajoria, a senior economist at Barclays, investments in those areas have declined recently in comparison to more recent ones like telecommunications and the digital sector.

He noted that increased investment, particularly in traditional sectors, ought to have a favourable effect on household income and employment, which might assist decision-makers in creating better economic growth plans.

Citing IMF data, the Barclays report states said China's contribution to global gross domestic product is estimated at about 26 percent in the five-year period through 2028.

Based on a GDP growth rate of 6.1% throughout the time period, India's contribution is calculated at 16%. By 2028, India's contribution would virtually match that of China if it saw an 8% increase.

According to Barclay's analysts, India has outperformed the rest of the globe in terms of growth, achieving a strong expansion with relatively low inflation and moving towards at least 6% GDP growth while maintaining broad macro stability.

“Amid considerable economic turbulence in the rest of the world, India has been an island of relatively better macro outcomes in the past two years. On the surface, India is once again poised to be the fastest-growing major economy in the medium term, as global growth is expected to be weaker through 2023-2024 (compared to historical levels),” the report says.

Even if India's growth slowed in 2023, the research notes that it still outperformed its counterparts globally and was accompanied by "ample macro stability". The government, it says, is also focused on managing inflation.

India has maintained a 10 percent share of the global GDP despite having the fastest-expanding major economy (outside of China) for the previous ten years. India currently has a "much smaller share of the global economy than China" and even a smaller share than the US.

While the report says that while India will “likely continue to outpace China on growth in the next five years under current growth projections (IMF), its contribution to global GDP will still lag.”

According to the report, this growth is possible if the government implements a number of economic preconditions, such as a nominal savings rate that is closer to 32.3 percent of GDP than the present 30.2 percent and incremental workforce growth of 3.5 percent annually as opposed to the current 1 percent. This can be accomplished, according to the paper, through "increased female participation, a larger global export share, and ongoing productive use of capital quantified as an ICOR of around 5".

India's government has stepped up infrastructure spending in the past few years, allocating a record Rs 10 lakh crore in the current fiscal year through March 2024.

Prime Minister Narendra Modi aims to boost India's economy to $5 trillion by 2024-25, from about an estimated $3.7 trillion currently.

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