When Will India Become the World's Third Largest Economy?
Currently, India Is the World’s Fifth-Largest Economy
India could become the world's third-largest economy by 2027, with a Gross Domestic Product (GDP) of 5 trillion dollars, announced the Indian Ministry of Finance.
According to the Ministry, the economy is poised for growth of 7% or more, starting from the fiscal year 2024. India's fiscal year begins on April 1st and ends on March 31st. If this year's target is achieved, it will be the third consecutive year of a 7% GDP increase for India.
The country's GDP currently stands at 3.7 trillion dollars. India's Chief Economic Advisor, V Anantha Nageswaran, stated that the government's goal is to become a developed country by 2047.
"The resilience observed in domestic demand, namely in private consumption and investments, is rooted in the reforms and measures implemented by the government over the past ten years," Nageswaran mentioned in the report, outlining the key drivers of India's growth. He added that investments in both physical and digital infrastructure have helped bolster supply and production. As a result, "the real GDP growth is likely to be closer to 7%" in the fiscal year 2025.
According to Goldman Sachs, India is set to become the world's second-largest economy by 2075, surpassing not only Japan and Germany but also the United States. Currently, India is the world's fifth-largest economy, behind the US, China, Japan, and Germany.
Indian stocks have had a positive start this year. The Nifty 50 index increased by more than 20% in 2023. This month, the index surpassed 22,000 points for the first time. The growing optimism about the growth prospects of the world's most populous country, along with higher liquidity and greater domestic participation, have been key factors in fueling the rally.
Hopes for further policy continuity were also a driving force in the rally, as India prepares for general elections between April and May. Investors are betting that the Reserve Bank of India will cut interest rates this year, likely in the second half – a move that will likely boost the stock markets and stimulate higher spending in the economy.
