Will india become the third-largest economy in the world?

Modi's dream of india is just three years away. It is expected to be among the top 3 largest economies in the world. According to a recent report released by international financial services firm Morgan Stanley, india is likely to become the third-largest economy in the world by 2028. Morgan Stanley is optimistic that india, which is currently the fifth-largest economy in the world, will achieve unprecedented growth in the next few years. According to Morgan Stanley estimates, the size of the indian economy will reach $5.7 trillion (approximately Rs. 495 lakh crore) by 2028. This is a significant increase from $3.5 trillion in 2023. Moreover, the report states that the indian economy will reach $4.7 trillion by 2026, becoming the fourth-largest economy in the world. Currently, this position is held by Germany. This will put india in third place after the US and China.

The indian economy has undergone significant changes in the last few decades. india, which was the 12th largest economy in the world in 1990, fell to 13th place by 2000. However, it has since rebounded dramatically and reached 9th place by 2020 and 5th place by 2023. India's share in the world's GDP is currently 3.5 percent, and Morgan Stanley estimates that it will increase to 4.5 percent by 2029. Morgan Stanley has cited several reasons for India's emergence as the third-largest economy in its report. The most important of them are:

A highly attractive consumer market: india is emerging as a rapidly growing consumer market. The growing middle class and its purchasing power are boosting the economy.

A growing share of global productivity: In the context of changing manufacturing across the world, india is increasing its manufacturing capacity. This will significantly contribute to the country's economic growth.

Macroeconomic stability with policy support: The right economic policies taken by the government have established macroeconomic stability in the country. This will help attract investments.

Improved infrastructure: Infrastructure in india is developing rapidly. The development of roads, railways, airports, etc. will facilitate economic activities.

Three types of growth trends:

Morgan Stanley has classified the growth of the indian economy into three types:

Bear phase: In this phase, the current economy of $3.65 trillion will reach $6.6 trillion by 2035. Per capita GDP will increase from $2,514 in 2025 to $4,247 by 2035.

Base phase: This is the medium growth phase. According to this projection, the indian economy will reach $8.8 trillion by 2035. Per capita GDP will increase to $5,683.

Bull phase: This is the most optimistic scenario. In this phase, the indian economy is likely to reach $10.3 trillion by 2035. Per capita GDP is likely to increase to $6,706.

Another quarter-percentage point repo rate cut likely:

Morgan Stanley believes that the reserve bank of india (RBI) is gradually easing monetary policy. With inflation under control, the RBI is likely to cut the repo rate by another 0.25 percentage point in the review to be held in April. It is known that the RBI has already cut the repo rate by a quarter percentage point in the february review.

Morgan Stanley has estimated that the indian economy will register a growth of 6.3 percent in the current fiscal year. It has said that this growth rate may reach 6.5 percent in the next fiscal year. Although economic indicators have been mixed in the last few weeks, the situation is much better than two months ago, the report said. It expects the economic recovery to be broad-based in the coming period, and the income tax cuts announced in the budget will boost demand in urban areas. Morgan Stanley said that government and household sector investments are currently contributing mainly to growth, while corporate investments are also gradually increasing. Overall, Morgan Stanley's projections are positive for the indian economy. Given the right policies and favorable global economic conditions, india has the potential to emerge as a global economic powerhouse in the next few years.
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Sowmiya Sriram

16/03/2025 09:15 AM