After overcoming the United Kingdom (UK) to become the fifth largest economy in the world, India is expected to pass two more significant economies by the end of this decade.
India’s Economic Research Department predicted that, if growth continues at the current rate, the country will surpass Germany in 2027 and most likely Japan in 2029 to become the third-largest economy in the world, climbing seven places from its 2014 ranking of the tenth. This is a remarkable performance by any standard, claims the paper, which was produced by Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.
In the first quarter of FY 2022-2023, India’s GDP increased by 13.5%. The report predicted that India’s economy would likely grow the fastest during the current fiscal year.”Interestingly, even as estimates of India’s GDP growth rate for FY23 currently is from 6.7% to 7.7%, we firmly believe that it is immaterial. In a world that is ravaged by many uncertainties, we believe 6% to 6.5% growth is the new normal,” the report noted.
The study additionally advocated expanding India’s IIP (Index of Industrial Production) basket, which at the moment comprises items from 2021. The SBI study used the export of phones as an example and noted that companies like Foxconn now produce handsets in India but are not counted in the current IIP basket. A few enterprises have also relocated their steel production sites. However, the IIP sample does not reflect these changes.
Further Upside Expected
The study predicts that as China’s desire for new investments slows, India will soon benefit.”Global tech major Apple’s recent decision to shift the part production of its flagship iPhone 14 model for worldwide shipping from India bears testimony to such optimism! The move by Apple, the most recognizable face of the tech-infused innovation in the last two centuries that captures aspirations of an upwardly mobile population, should open floodgates for other major conglomerates to follow suit,” the report added further.
China started the new century with the second-largest economy and set out on a path of increased expansion. According to the SBI analysis, current forecasts may even be revised upward, provided India keeps up its appropriate policy posture and global geopolitics realign.
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