In a recent revelation, the Union Finance Ministry projected India’s economy to soar beyond the $7 trillion mark by 2030, fueled by robust financial sector performance and ongoing structural reforms. The comprehensive report, titled ‘Indian Economy – A Review,’ forecasts a growth rate surpassing 7% in the coming years, underlining the nation’s potential ascent to become the third-largest economy globally in the next three years, with a projected GDP of $5 trillion.
Aiming High: $7 Trillion Economy by 2030
The report anticipates that the Indian economy will grow at a rate surpassing 7% in the coming years, propelled by the robust financial sector and ongoing and future structural reforms. By 2030, India aspires to claim the position of the third-largest economy globally, with an estimated GDP of $5 trillion. The report, however, reveals that the government has set an even loftier goal of achieving ‘developed country’ status by 2047.
Financial Sector and Structural Reforms as Catalysts
Attributing the expected growth to the government’s policies, the report highlights the strengthening of the supply side through substantial investments in physical and digital infrastructure. This strategic move aims to bolster output and economic resilience. The report underscores that the proactive measures over the last decade have placed India on a remarkable trajectory, positioning it as the 5th largest economy globally with an estimated GDP of $3.7 trillion (FY24).
Economic Resilience Amid Global Challenges
Despite grappling with the challenges posed by the COVID-19 pandemic and inheriting an economy with macro imbalances and a fragile financial sector, India’s domestic demand has been a driving force, leading to a consistent growth rate of over 7% in the last three years. The report emphasizes that the reforms and measures implemented by the government have contributed to the robustness witnessed in domestic demand, particularly in private consumption and investment.
Continuity in Reforms for Future Prosperity
Looking ahead, the report signals continuity in economic reforms, especially if the Modi government secures a third term. It acknowledges a decade marked by substantive and incremental reforms, delivering economic resilience necessary to navigate unforeseen global shocks in the future. India’s climb from the 10th largest economy to the 5th largest, despite the challenges, showcases its internal strengths.
Global Growth Dynamics and India’s Unique Position
Citing data from international agencies such as the International Monetary Fund (IMF) and the World Trade Organization (WTO), the report underscores India’s unique position. Despite the pandemic and geopolitical turbulence impacting global growth, India has maintained its status as the fastest-growing major economy in the world. The internal strengths of the Indian economy, including the ability to grow amidst unfavorable global conditions, are highlighted as key factors.
Collaboration for Equitable Growth
The report emphasizes the significance of collaboration between the central and state governments in accelerating India’s growth and making it more equitable. It proposes that reforms should encompass changes in governance at the grassroots level, making them citizen-friendly and conducive to small businesses. Areas such as health, education, land, and labor, where states play a substantial role, are crucial components of the envisioned collaboration.
Challenges on the Horizon
While the report exudes confidence, it doesn’t shy away from acknowledging external challenges, with the elevated risk of geopolitical conflicts identified as an area of concern. The report calls for future reforms in skilling, learning outcomes, health, energy security, and reducing compliance burdens for micro, small, and medium enterprises (MSMEs). Gender balancing in the labor force is also emphasized.
Aspiring for a $7 Trillion Economy
With a reasonable set of assumptions regarding inflation differentials and the exchange rate, the report suggests that India can realistically aim to become a $7 trillion economy within the next six to seven years, attaining this significant milestone by 2030. This ambitious goal aligns with the vision of delivering a quality of life and standard of living that exceeds the aspirations of the Indian people.