With a GDP of $5 trillion over the next three years and approaching $7 trillion by 2030 thanks to ongoing reforms, India is predicted by the finance ministry to become the world's third-largest economy. Ten years ago, India ranked tenth globally in terms of GDP, with current market values at $1.9 trillion.
According to the ministry's January 2024 assessment of the economy, despite the pandemic and despite inheriting an economy with macro imbalances and a damaged banking sector, it is currently the fifth largest, with a GDP of $3.7 trillion (estimate FY24).
"This ten-year journey is marked by several reforms, both substantive and incremental, which have significantly contributed to the country's economic progress," stated the statement.
It further stated that these reforms have given the nation the economic resilience it would need to handle unforeseen global shocks in the future. According to the ministry, with a GDP of $5 trillion, India's economy is predicted to grow to become the third largest in the world in the next three years.
"But the government's more ambitious target is to turn itself into a 'developed country' by 2047. This aim is attainable as long as reforms are implemented," it stated. Under the leadership of Nirmala Sitharaman, the ministry emphasized that strong state government participation will make the changes more fruitful and purposeful.
States will participate more fully in reforms if they include changes to governance at the district, block, and village levels, making them more hospitable to citizens and small businesses. This is especially true in sectors where states have a significant role to play, such health, education, land, and labor.
The review report stated, "The strength of domestic demand has driven the economy to a 7 per cent plus growth rate in the last three years...in FY25, real GDP growth will likely be closer to 7 per cent," but it also noted that there is a good chance that the growth rate will exceed 7 per cent by 2030. The assessment noted that given the strength of the banking sector and other recent and upcoming structural reforms, it is very likely that the Indian economy will grow in the upcoming years at a rate higher than 7%. Concerns only relate to the increased likelihood of global conflicts.
"Furthermore, under a reasonable set of assumptions with respect to the inflation differentials and the exchange rate, India can aspire to become a $ 7 trillion economy in the next six to seven years (by 2030)," said the report.
Chief Economic Adviser V Anantha Nageswaran stated in the preface of the review report that the public sector capital investment has increased from Rs 5.6 lakh crore in FY15 to Rs 18.6 lakh crore in FY24, as per budget estimates, due to the Union government's historically unprecedented pace of infrastructure construction.
He pointed out that the world economy has been battered by a series of shocks and is now finding it difficult to sustain its post-Covid recovery. In 2024, a few of them - like supply chain interruptions - have come back. He stated that if they continue, they will have an effect on global trade flows, transportation costs, economic production, and inflation.
