India To Become 3rd Largest Economy With GDP Of USD 5 Trillion In 3 Years: Finance Ministry

Ten years ago, India was the 10th largest economy in the world, with a GDP of USD 1.9 trillion at current market prices.

New Delhi: The finance ministry announced on Monday that India is projected to climb to the position of the world's third-largest economy within the next three years, boasting a GDP of USD 5 trillion, and is anticipated to reach USD 7 trillion by 2030. This remarkable growth is attributed to ongoing reforms. A decade ago, India held the 10th spot on the global economic scale, with a GDP of USD 1.9 trillion at current market prices.

As of the fiscal year 2024 estimate, the economy stands as the fifth largest globally, boasting a GDP of USD 3.7 trillion. This achievement is notable, considering the challenges posed by the pandemic and the initial state of the economy marked by macro imbalances and a distressed financial sector, as highlighted in the January 2024 economic review by the ministry. 

These reforms, it added, have also delivered an economic resilience that the country will need to deal with unanticipated global shocks in the future. The ministry said that in the next three years, India is expected to become the third-largest economy in the world, with a GDP of USD 5 trillion. "The government has, however, set a higher goal of becoming a 'developed country' by 2047. With the journey of reforms continuing, this goal is achievable," it said.

The Finance Ministry led by Nirmala Sitharaman emphasized that reforms would be more effective and beneficial with the active involvement of state governments. Enhanced state participation is anticipated when reforms extend to governance alterations at the district, block, and village levels, aiming to be small business-friendly. These reforms will specifically target crucial areas like health, education, land, and labour, where states play a significant role.

"The strength of the 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," said the review report, and added there is, however, considerable scope for the growth rate to rise well above 7 per cent by 2030. The review observed that it is eminently possible for the Indian economy to grow in the coming years at a rate above 7 per cent on the strength of the financial sector and other recent and future structural reforms. 

Only the elevated risk of geopolitical conflicts is an area of concern. "Furthermore, under a reasonable set of assumptions regarding the inflation differentials and the exchange rate, India can aspire to become a USD 7 trillion economy in the next six to seven years (by 2030)," it said.

In the preface of the review report, Chief Economic Adviser V Anantha Nageswaran said the Union government has built infrastructure at a historically unprecedented rate, and it has taken the overall public sector capital investment from Rs 5.6 lakh crore in FY15 to Rs 18.6 lakh crore in FY24, as per budget estimates. 

He noted that the global economy is struggling to maintain its recovery post-Covid because successive shocks have buffeted it. Some of them, such as supply chain disruptions, have returned in 2024. If they persist, they will impact trade flows, transportation costs, economic output and inflation worldwide, he said. 

(With Inputs From PTI).