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Our Bureau

Mumbai, Dec. 14 In a recent study conducted by Motilal Oswal Financial Services, it predicts the Indian economy to hit the $2 trillion GDP mark in the next five years.

The study states that, given the high base, the GDP that will be added in the next five years will be more than what did get added in the last 30 years, and twice that of the last five years. From 1977 to 2002, India’s nominal GDP was growing at a rate of 6.2 per cent per annum to just under $0.5 trillion in 2002. In the last five years, the country’s GDP has more than doubled to hit $1 trillion at a CAGR of 16 per cent.

With a steady growth rate of 16 per cent in the last five years, the study predicts that in the next five years, the growth would be exponential and will percolate into several sectors such as financial services, wireless telecom, cars, engineering and construction and cement and steel.

The report also foresees a rise in luxury spending, which will lead to growth in automobiles, air conditioners and travel.

According to the study, the stock markets are over valued along with a low safety margin. But the market has limited downside due to positive outlook on corporate earnings growth and the lower interest rates.

While country’s savings rate has gone up, there has been a huge foreign fund inflow into India. This kind of liquidity can push up the market evaluations further, though the returns may not match the 30 per cent delivered in the last five years, the report stated.

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