India is likely to get the third largest economy tag 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 10th, per State Bank of India’s economic research report ‘Ecowrap’.
State-wise estimates indicate that at least two States, Maharashtra and Uttar Pradesh (UP, which will be the Indian ‘Land of Midnight Sun’), will break the $500-billion mark in 2027 (or FY28).
India should surpass both Japan and Germany in 2027 at the current rate of growth, the report, put together by SBI’s Economic Research Department (ERD), said.
“This is a remarkable achievement by any standard. Interestingly, the incremental (GDP) increase by India between 2022 and 2027, is more than the current size of Australia’s economy at $1.8 trillion!
“At this rate, India is likely to add $0.75 trillion in every 2 years, implying that India is all set to touch $20 trillion by 2047, at least on current numbers. India’s global share in GDP will cross 4 per cent by 2027,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.
The ERD underscored that behind this surge, India needs to grow at a CAGR (compounded annual growth rate) of 8.4 per cent till 2027 (in dollar terms).
This translates into 11.0-11.5 per cent nominal GDP growth per annum (in rupee terms), which is eminently achievable with a 6.5-7 per cent growth rate, it added.
“The Indian economy continues to enjoy a period of sustained Goldilocks. There is now an increasing consensus that India’s GDP in Q1FY24 is likely to surpass 8 per cent (SBI projection at 8.1 per cent with an upward bias), thus pushing India’s GDP growth to beyond 6.5 per cent for FY24.
“We firmly believe that in a world that is ravaged by uncertainties, 6.5-7.0 per cent growth is the new normal,” Ghosh said.
The GDP size of major States in 2027 will be more than the size of some of the Asian and European countries like Vietnam and Norway, the report said.
In the coming days, as macroeconomic prospects steadily improve, India will dynamically seek fuller expression of its full potential and a transformative change in its global position, per the report.
Additionally, the recent visits of the PM mark significant long-term economic gains for India in areas of onshoring of chip manufacturing, defence relationship, climate transition & climate finance, trade disputes and creation of special economic zones.
The ERD said these developments will have a cascading impact on economic growth in India and the extended neighbourhood.