Can India make it to the top three economies club?

Beyond all doubts and braving all odds along the way, the country’s economy continues to enjoy a period of sustained goldilocks. There is now an increasing consensus that India’s GDP in Q1 is likely to surpass eight per cent, thus pushing the GDP growth to beyond 6.5 per cent for FY24. Many analysts are firm of the opinion that in a world that is ravaged by uncertainties, 6.5-7 per cent growth is the new normal. The path taken by India since 2014 reveals that it is likely to earn the tag of the third largest economy in 2027 (or FY28) based on actual GDP data as on March, an upward movement of seven places since 2014 when it was ranked 10th and two years prior to the earlier forecast of achieving the status in 2029. India should surpass both Japan and Germany in 2027 at the current rate of growth. This is a remarkable achievement by any standards. Interestingly, the incremental increase between 2022 and 2027 is more than the current size of Australia’s economy at $1.8 trillion. At this rate, India is likely to add $ 0.75 trillion every second year, implying that the country is all set to touch $20 trillion by 2047, at least on current numbers, says a report by Ecowrap.

India’s global share in GDP will cross four per cent by 2027. However, the country needs to grow by CAGR of 8.4 per cent till 2027 (in dollar terms). This translates to 11.0-11.5 per cent nominal GDP growth per annum (in Rs terms), which is eminently achievable with a 6.5-7 per cent growth rate. The state-wise estimate indicates that at least Maharashtra and Uttar Pradesh will break the $500 billion mark in 2027 (or FY28) when India occupies the third place in global economy. The GDP size of major Indian states in 2027 will be more than the size of some of the Asian and European countries like Vietnam, Norway and so on. In the coming days as macroeconomic prospects steadily improve, India will dynamically seek fuller expression of its full potential and a transformative change in its global position. Moreover, the recent foreign visits by Prime Minister Narendra Modi point at substantial long-term economic gains in onshoring of chip manufacturing, defence relationship, climate transition and climate finance, trade disputes and creation of special economic zones. Development will have a cascading impact on the country’s economic growth.

Despite the economy not growing as fast as it would like to (read 8-9 per cent per annum), even a modest annual growth rate of six per cent will be enough to overtake Germany and Japan by 2027. Not to mention that the country is already in the ‘Top Five’ economies club. Let’s wait for the opportune moment when India joins the world’s three most powerful economies, and thereof command a global leader position.