
MUMBAI: Forecasting a sustained 6.5 per cent growth over the medium term, a foreign agency has projected that the economy will almost double by FY31 to become a USD 6 trillion-plus giant from the USD 3.8 trillion this fiscal.
The optimism comes from their belief that the recent slowdown was cyclical and that, structurally, the economy has no problems as of now.
The economy is on track to achieve 6.5 per cent-plus growth in the medium term (but 6.3 per cent this fiscal) and is expected to maintain potential growth of 6.5 per cent annually through FY28, making it the world's third-largest consumer market in 2026 and the third-largest economy by 2027.
"The GDP will expand from USD 3.8 trillion in FY25 to USD 6 trillion-plus by FY31," Tanvee Gupta Jain, the chief economist at UBS Securities India, said in a note Monday.
She believes this growth will be led by the manufacturing and export push, robust services exports, and digitalisation, leading to improvement in productivity and efficiency gains.
On the turmoil sweeping global geopolitics and trade after Donald Trump assumed office last week, she feels that the radical global policy shifts underway could offer new opportunities and strengthen the case for "China + 1" supply chain shifts to India in the medium term.
Among the medium-term challenges that the economy faces, she lists the creation of jobs for the jobless millions, along with a less friendly external environment and the automation overhang.
On the immediate term, she says the cyclical slowdown seen in the first half is behind us, and a modest recovery is likely underway now, which should help the economy close this fiscal with a 6.3 per cent growth print.
She thinks the slowdown in H1 was cyclical and partly policy-driven, both regulatory as well as fiscal, as government capex slowed due to the elections. Given that this is behind us, she says GDP is likely to see a modest cyclical recovery towards 6.5 per cent in H2 from 6 per cent in H1. This would bring full-year growth to 6.3 per cent in FY25, below the consensus of 6.5 per cent.
This lower projection is based on an assumption that global growth slows from 3.2 per cent in 2024 to 3.0–2.7 per cent in 2025, and a 60 per cent US tariff hike on imports from China from this September.