IMF’s Gita Gopinath says India to become 3rd-largest economy by 2027

WASHINGTON : First Deputy Managing Director of the International Monetary Fund (IMF) Dr Gita Gopinath has said that India’s growth has been better than expected. She said the IMF expects private consumption to recover and a favourable monsoon to increase harvests. She said India is expected to become the third-largest economy by 2027.

“India’s growth did much better than we expected the last fiscal year and that those carryover effects are affecting our forecast for this year. The other factor is we see private consumption recovering,” said Gopinath.

She said revival of consumption in India, including in rural areas, is a good sign for the country’s economic growth. Considering the new data for FMCG, two-wheeler sales and a favourable monsoon, the IMF increased India’s growth projection for the financial year 2024-25 to 7 per cent. 

This is almost in line with what the Reserve Bank of India projected in its latest Monetary Policy Committee announcements. In the August MPC, RBI Governor Shaktikanta Das had projected real GDP growth rate for 2024-25 to be 7.2 per cent. The MPC projected real GDP for 2024-25 Q1 at 7.1 per cent, Q2 at 7.2 per cent, Q3 at 7.3 per cent, and Q4 at 7.2 per cent.

The IMF’s projection is more bullish than the 6.5-7 per cent projected for FY25 in the Economic Survey 2024, released a day ahead of the Union Budget 2024.

“Last year, if you looked at private consumption growth, it was around 4 per cent. We expect that to increase, driven by the recovery in rural consumption. We’re already seeing that if you look at two-wheeler sales and if you look at, you know, the so-called fast moving consumer good sales. You’re seeing that coming back up,” she said. 

“The better monsoons that have happened, we expect will generate better harvests. And because of that, with agricultural incomes going up, we should see a recovery in rural consumption. So those are the two factors behind our upgrade,” said Gopinath, explaining why the IMF increased India’s growth projection