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Economists say India to be 3rd largest economy by 2027, advance estimate by 2 years

Economists at India's largest bank, SBI, revised their prediction of the Indian economy becoming the third largest in the world by two years, to 2027.

In a note released a day after Prime Minister Narendra Modi expressed confidence in gaining a third term and India's rapid ascent to the third-largest economy by 2029, SBI economists predicted that India's real GDP will increase by more than 6.5% in FY24.

"The path taken by India since 2014 reveals that India 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 7 places upwards since 2014, when India was ranked 10th and two years earlier than our previous forecast of 2029," the economists said in the note.

The NDA government led by PM Modi came to office in 2014. The RBI predicts that the real GDP will grow by 6.5%, which is one of the highest estimates among economists. India is currently the fifth largest economy in the globe.

According to the SBI report, the GDP will increase by 8.1% in the first quarter of FY24, ensuring that the overall expansion exceeds 6.5%. It also stated that a growth rate between 6.5-7 percent is the new norm for the nation.

Indicating that the economy is in a "sustained goldilocks" period, the economists at the state-owned lender stated that India's ascent to the third largest economy would be "remarkable achievement by any standards."

The estimated increase of USD 1.8 trillion between 2022 and 2027 will be greater than the present size of the Australian economy, according to economists.

By 2027, India's share of the global GDP will reach 4%, they predicted, adding that the country's economy will grow by 0.75 trillion every two years.

Such a rate of GDP growth will make India's economy worth USD 20 trillion by 2047, when the nation will be celebrating a century of independence.

A nominal growth of 11-1.5% or a real growth of 6.5-7% per annum will help India's compound annual growth rate reach 8.4%, the report stated, adding that such a growth is "eminently possible."

The respective GSDPs of Maharashtra and Uttar Pradesh will surpass USD 500 billion by 2027, the report states, adding that the northern state governed by Yogi Aditynath is the "land of the midnight sun."

The note also stated that Prime Minister Modi's recent trips to the United States and France will result in significant long-term economic benefits for India in the areas of onshoring of semiconductor manufacturing, defence relationship, climate transition and climate finance, trade disputes, and creation of special economic zones.

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