India is expected to be a $7-trillion economy in the next 5-7 years said V Anantha Nageswaran, Chief Economic Advise.

Talking about the global scenario, he said, the continuing conflict between Russia and Ukraine will create geopolitical and geo-economic uncertainties. India should be able to clock real GDP growth of around 6.5 per cent in the medium term on the back of digital infrastructure and improvement in financial and corporate sector balance sheets.

“In these contexts, the Indian economy will be of the size of $3 trillion at the end of March 2023 and $7 trillion in the next seven years, which is not impossible,” Nageswaran said while virtually addressing the round table session of MCCI Economist Forum, organised by the Merchants’ Chamber of Commerce & Industry here on Monday.

Banks are well capitalised, non-performing assets have been coming down and it is amply reflected in the credit growth. The corporate sector is deleveraged and is now willing to resort to borrowing and investing, he said adding that the country has the opportunity to grow consistently above 6 per cent.

Employment generation, particularly in the informal sector, is expected to gain momentum on the back of recovery in construction and real estate sectors. “Employment opportunity in informal sector will start to improve like (we have seen) the formal sector,” he said.

Currency appreciation

India may have to manage the challenge of rupee strengthening in the years to come, rather than depreciation of currency, which the country has been witnessing in recent years. According to Nageswaran, the US might resort to lowering of interest rates in 2024-25 and if that happens, the Indian rupee might start gaining strength moving forward.

“India will have to manage the challenge of rupee strengthening rather than depreciation like we witnessed in the first decade of the millenium, (when we saw rupee strengthening against the greenback),” he said.

Even though the Indian rupee lost ground against US dollar, it has been much stable as compared to some other currencies such as Japanese yen, pound sterling and the euro. There is an opportunity for India to internationalise its currency, he said.