India to become third largest economy with GDP of $5 trillion in three years : Finance Ministry

NEW DELHI : India is anticipated to become the third-largest economy in the world with a GDP of $5 trillion in the next three years, the Finance Ministry said on Monday. The ministry added that the country is expected to touch $7 trillion by the end of the decade, helped by continued reforms.

In its January 2024 review of the economy, the ministry said, “Ten years ago, India was the 10th largest economy in the world, with a GDP of $1.9 trillion at current market prices. Today, it is the 5th largest with a GDP of $3.7 trillion (estimate FY24), despite the pandemic and despite inheriting an economy with macro imbalances and a broken financial sector,” reported PTI. 

The review further stated that this journey was marked by multiple reforms, both substantive and incremental, and said that these have majorly contributed to the country’s economic progress. “These reforms have also delivered an economic resilience that the country will need to deal with unanticipated global shocks in the future,” the ministry said.

In the next three years, the ministry noted that India is anticipated to be the third-largest economy in the world. “The government has, however, set a higher goal of becoming a ‘developed country’ by 2047. With the journey of reforms continuing, this goal is achievable,” it added. 

The ministry also highlighted that the reforms will be more efficient and successful with the state governments’ full participation. “The participation of states will be fuller when reforms encompass changes in governance at the district, block, and village levels, making them citizen-friendly and small business-friendly and in areas such as health, education, land, and labour, in which states have a big role to play,” the ministry added. 

The review report observed, “It is eminently possible for the Indian economy to grow in the coming years at a rate above 7 per cent on the strength of the financial sector and other recent and future structural reforms. Only the elevated risk of geopolitical conflicts is an area of concern. Furthermore, under a reasonable set of assumptions with respect to the inflation differentials and the exchange rate, India can aspire to become a $7 trillion economy in the next six to seven years (by 2030).”

As a preface to the review report, the chief economic adviser, V Anantha Nageswaran, noted, “The Union government has built infrastructure at a historically unprecedented rate, and it has taken the overall public sector capital investment from Rs 5.6 lakh crore in FY15 to Rs 18.6 lakh crore in FY24, as per budget estimates. The global economy is struggling to maintain its recovery post-Covid because successive shocks have buffeted it. Some of them, such as supply chain disruptions, have returned in 2024. If they persist, they will impact trade flows, transportation costs, economic output, and inflation worldwide.”