When will India become the third-largest economy?
Upstox
2 min read • Updated: February 24, 2024, 4:36 PM
Summary
In a recent evaluation by a global brokerage firm called Jeffries, it was projected that India will become the third largest economy by 2027. This estimate reflects India's potential and growth opportunities on a global stage. India is on its way to become the world's third largest economy, making it an important milestone in its economic history. A skilled workforce and rising domestic demand, sprinkled with Foreign Institutional Investors (FIIs) would accelerate its growth more than ever.
India’s consistent growth path
Over the last decade, India's Gross Domestic Product (GDP) has grown consistently, with a 7% compound annual growth rate (CAGR). This continuous growth has raised India's GDP to $3.6 trillion, making it the fifth-largest economy from the eighth largest.
India's status as the world's third-largest economy would elevate it to the rank of an economic powerhouse. Its GDP would exceed that of Japan and Germany, which is more than $10 trillion by 2027.
Unicorn hotspot
India's developing entrepreneurial sector has seen a significant leap. The country has emerged as the world's third-largest unicorn hotspot, with 111 unicorns worth a total of $350 billion. An unicorn is a company with a valuation of more than $1 billion.
Plus, government initiatives and programs are being aimed at developing digital infrastructure. The central government is increasing the availability of a skilled labour pool, which will in turn help in the expansion of digital exports.
Factors contributing to India's economic growth
Here are the factors that have been contributing to the growth trajectory of the Indian GDP.
- Demographic Dividend- India's population is young and rising. This would create a large pool of workers for its industries in the future. This demographic dividend contributes directly to the country’s GDP. So, this young population can help in building the nation’s prosperity.
- Domestic Consumption- An expanding middle class is pushing up demand for goods and services. India has even surpassed China’s consumer demand in the world. Now India being the biggest consumer market in the world, it capable of outrunning economic adversities, like Covid 19. Hence, this can boost economic activity.
- Foreign Institutional Investors (FIIs)- The government is encouraging foreign investors to invest in the Indian market. It is even improving the ease of doing business in India. Such government effort would truly increase interest in the minds of foreign investors.
- Infrastructure-There has been an economic expansion in infrastructure. This includes improvements in transportation, energy, and healthcare. Thus, raising the country’s standard of living.
Conclusion
Finally, India's ascend to the world's third largest economy by 2027 would definitely be a turning point moment in the country's economic history. This growth will not only improve India's global position but also uplift the lives of its citizens.