Virendra Pandit
New Delhi: India is likely to emerge as the world’s third-largest economy by 2027-28 and at least two of its states—Maharashtra and Uttar Pradesh– would break the USD 500 billion mark, the State Bank of India’s Economic Research Department’s report, SBI Ecowrap, said.
At its current rate of growth, the South Asian country, the fastest-growing economy in a gloomy world, might surpass both Japan and Germany in 2027.
India needs to grow by a CAGR of 8.4 percent until 2027 (in US dollar terms), which would translate into 11-11.5 percent nominal GDP growth per annum (in Indian rupee terms). It is achievable with a 6.5-7 percent growth rate, says the report.
This projection is in line with Prime Minister Narendra Modi’s confidence that India will be among the top three world economies during his third term in office, beginning in 2024.
According to the SBI report, there is an increasing consensus that India’s GDP in the first quarter of FY24 is likely to surpass 8 percent, pushing its overall GDP growth beyond 6.5 percent in the current financial year (2023-24).
“The path taken by India since 2014 reveals that it is likely to get the tag of the third largest economy in 2027 (or FY28) based on actual GDP data as on March 2023, a movement of seven places upwards since 2014, when India was ranked tenth, and two years earlier than our previous forecast of 2029,” it said.
The incremental increase by India between 2022-2027 would be more than the current size of Australia’s economy at USD 1.8 trillion., the report said.
“At this rate, India is likely to add USD 0.75 trillion every 2 years, implying that it is all set to touch USD 20 trillion by 2047, at least on current numbers. India’s global share in GDP will cross 4 percent by 2027.”
“We firmly believe that in a world that is ravaged by uncertainties, 6.5-7 percent growth is the new normal,” the report said.
Stating that the Indian economy is in a “sustained goldilocks” period, the economists at the largest state-owned lender said becoming the third largest economy will be a “remarkable achievement by any standards”’ for India.
At least two states, Maharashtra and Uttar Pradesh, will break the USD 500 billion mark in 2027 (or FY28) when India achieves a third place in the global economy, it said, adding the northern state is the “land of the midnight sun.” 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.
On Wednesday, PM Modi expressed confidence that India will be among the top three economies globally if he’s elected to a third term in office next year.
Addressing a gathering after inaugurating the revamped ITPO complex at the Pragati Maidan in New Delhi, PM Modi, whose government will complete 10 years in office in 2024, said, “In my third term, India will proudly stand as the top three economies with the two other nations. You will see your dreams coming true..Yeh Modi ki guarantee hai (this is Modi’s guarantee).”
He said that when his government took office in 2014, the Indian economy was at the tenth position and now it is at the fifth position in the world.