Mumbai: Economists at the country's largest lender State Bank of India (SBI) advanced their estimate on Thursday on the Indian economy becoming the third largest in the world by two years to 2027. In a note that comes a day after Prime Minister Narendra Modi exuded confidence of winning a third term and India galloping to being the third largest till 2029, SBI economists said India's real GDP will grow at over 6.5 percent 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.
PM Modi-led NDA government came to power in 2014. The RBI estimates the real GDP to grow at 6.5 percent, which is one of the highest estimates by any watchers. At present, India is the fifth largest economy in the world. The SBI report said the GDP will grow at 8.1 percent in the first quarter of FY24, which ensures that the overall expansion surpasses 6.5 percent. It also added that growing at 6.5-7 percent is the new normal for the country.
Stating that the economy is in a "sustained goldilocks" period, the economists at the state-owned lender said becoming the third largest economy will be a "remarkable achievement by any standards" for India. The incremental increase of USD 1.8 trillion estimated in the economy's size between 2022-27 will be more than the current size of the Australian economy, the economists said.
India's share in the global GDP will be 4 percent by 2027, they said, adding that the economy will add 0.75 trillion to its overall size every two years. Such a pace of GDP expansion will make India a USD 20 trillion economy by 2047 when the nation will be celebrating a century of its existence as a free state.
A nominal growth of 11-11.5 percent or a real growth of 6.5-7 percent per annum will help India's compounded annual growth rate come to 8.4 percent, it said, adding that such a growth is "eminently possible".
Among states, Maharashtra and Uttar Pradesh will breach the USD 500 billion mark on their respective GSDP by 2027, the report said, adding the Yogi Aditynath-ruled northern state is the "land of the midnight sun".
The note also said that PM Modi's recent visits to the US and France will deliver significant long-term economic gains for India in areas of onshoring of chip manufacturing, defence relationship, climate transition and climate finance, trade disputes and creation of special economic zones.