MUMBAI: The country is going to be the third largest by fiscal 2028 with the GDP likely to expand to USD 5.7 trillion—from USD 3.5 trillion in 2023 and USD 4.7 trillion in 2026, says a foreign brokerage.
By fiscal 2028, the country will also be the world's most sought-after consumer market and gains share in global output, driven by macro-stability-influenced policy and better infrastructure, Morgan Stanley said, adding that USD 5.7 trillion GDP will be the third largest after the US and China, overtaking Germany and Japan. By fiscal year 2026, the country will become the fourth largest, overtaking Japan. Currently, our GDP is the fifth largest after these nations.
“From a USD 3.5 trillion economy in 2023, the economy is projected to expand to USD 4.7 trillion in 2026, making it the fourth largest in the world behind the US, China and Germany and come fiscal 2028, the country will overtake Germany to become the third largest in the world with a GDP of USD 5.7 trillion,” the brokerage said, adding in the current fiscal the GDP is likely to print in at USD 3.65 trillion.
According to Morgan Stanley, the country was the 12th largest economy in 1990, slipped to 13th position in 2000 before rising to the ninth in 2020 and fifth in 2023.
The country’s share in the world GDP is projected to rise from 3.5% to 4.5% in 2029. It projects three scenarios: in a bearish scenario, the economy expands to USD 6.6 trillion by 2035 from USD 3.65 trillion in 2025. In a base case scenario, it grows to USD 8.8 trillion by 2035 and in a bullish scenario, the GDP balloons to USD 10.3 trillion.
The Wall Street major also sees GDP per capita rising from USD 2,514 in 2025 to USD 4,247 in the bear scenario in 2035, USD 5,683 under the base scenario and USD 6,706 under the bull scenario. Unfortunately, even in the bull scenario, the country will not attain even a middle-income status for which the per capita GDP has to be at least USD10,000.
"India is likely to gain share in global output in the coming years driven by a robust population growth, a functioning democracy, macro stability influenced policy, better infrastructure, a rising entrepreneurial class and improving social outcomes," Morgan Stanley in the report.
"The implication is that India will be the world's most sought-after consumer market, as it undergoes a major energy transition, a rise in credit to GDP and a rising share of manufacturing in GDP," it added.
On the short-term growth, the brokerage say growth is recovering, with fiscal and monetary policy support along with recovery in service exports which will push FY25 GDP to print in at 6.3% and 6.5 per cent in the next.