India expected to become world's third largest economy in 2027: Ministry of Finance

In a report released on Monday, the Finance Ministry said the economy is poised to grow by 7% or more in fiscal year 2024. India's fiscal year begins on April 1 and ends on March 31.

If it achieves this year's target, it will be the third consecutive year that GDP has grown by 7% in India.

The country's GDP currently stands at $3.7 trillion.

India's chief economic adviser, V Anantha Nageswaran, said the government's goal is to become a developed country by 2047.

“The strength we have seen in domestic demand, that is, private consumption and investment, has its origins in the reforms and measures implemented by the government over the past ten years,” Nageswaran said in the report, explaining the main drivers of growth in India.

He said investment in physical and digital infrastructure helped boost the supply side and manufacturing. As a result, he added, “real GDP growth is likely to be closer to 7 percent” in fiscal 2025.

The document released on Monday was not the India Economic Survey, which was prepared by the Ministry of Economic Affairs ahead of the Union Budget.

The Union Budget will be released only after the general elections between April and May this year – the interim budget will be presented by Finance Minister Nirmala Sitharaman on Thursday, and is unlikely to include any major changes in spending or taxation policies.

According to Goldman Sachs, India is expected to become the world's second largest economy by 2075, overtaking not only Japan and Germany, but also the United States.

Currently, India is the fifth largest economy in the world, after the United States, China, Japan and Germany.

Indian stocks have gotten off to a positive start this year.

The Nifty 50 index is up more than 20% in 2023 after hitting record highs last year. This month, the index broke the 22,000 level for the first time.

Growing optimism about growth prospects in the world's most populous country, as well as rising liquidity and increased domestic participation, were key factors in fueling the rise.

Hopes for policy continuity were also a driver of the rally, as India prepares to hold its general elections in April-May.

Investors are betting that the Reserve Bank of India will cut interest rates this year, most likely in the second half – which will likely lift stock markets as well as stimulate increased spending in the economy.