The Indian economy needs to grow by an annual 8% in order to surpass China as the global economy’s largest contributor, which would require a substantial increase in investment, particularly in traditional sectors.

According to forecasts by Barclays Plc, India should concentrate investment in sectors such as utilities, mining, transport and storage, which have more robust spillover effects on the wider economy, according to a senior economist at Barclays in Mumbai, Rahul Bajoria.

Over the past few years, investments in these areas have “taken a back seat” in favour of industries like the digital sector and telecommunications, the economist added. Additional investment, in particular from the government, is now required in traditional sectors due to capacity limitations, he said.

“Higher investment, especially in traditional sectors, should also have a positive impact on employment and household income, which is likely to be a key deliverable of the economic growth story pursued by policymakers,” he stated.

India’s economy grew by an average of 8% between 2005 and 2010 and may revert to this following the general elections next year if the new government aims for this target whilst maintaining macroeconomic stability, according to a Barclays forecast in September.

This would mean India could become the biggest global growth contributor and narrow the gap with China, Bloomberg reports.

China’s contribution to global GDP is estimated at around 26% up until 2028, according to Barclays, whilst India’s is estimated at 16%, based on a GDP growth rate of 6.1% over this timeframe.

In recent years, the Indian government has boosted infrastructure spending, with a record 10 trillion Rupees in the current fiscal year up until March 2024. The country’s Prime Minister Narendra Modi plans to boost the economy to $5 trillion by 2024-25 from a currently estimated $3.7 trillion.