Indian economy all set to become 3rd largest in the world by 2037: Reports

Indian economic trajectory is in the right direction as it is being predicted that the economy is all set to become the world’s third-largest economy by 2037 fueled by high economic growth and huge domestic demand 

The UK-based consultancy firm the Centre for Economics and Business Research have forecasted that the Indian economy is all set to become the world’s third-largest economy by 2037. As India’s annual rate of GDP growth is all set to grow at an average of 6.4% for the next five years. subsequently by 6.5% for the next nine years. The Indian economy is growing at a similar pace to China’s after the 2000s. 

The Report by the Centre for Economics and Business Research has said that India’s estimated PPP-adjusted GDP per capita is at $8293 which can be classified as a lower middle-income country. PPP GDP is a better measure to calculate the GDP as  PPP GDP is gross domestic product converted to international dollars using purchasing power parity.

The pandemic had a devastating effect on the Indian economy which led to a negative growth of 6.6% in FY 2021. This led many economists to believe that India failed to handle the macro as well as microeconomics of the country. However, the country grew tremendously as the economic activity rebounded fuelled by an increase in domestic demand which led the economy to grow at 8.7 % in the fiscal year 2021-22, making India the world’s fastest-growing economy

The consultancy firm has also said that the economy will be growing at the rate of 6.8% in FY 22-23 even in the midst of inflation, Us monetary policy, the Russia-Ukraine war, and other global uncertainties.

The Report further added that the output growth to ease in fiscal 2023-24, nevertheless, cebr is forecasting the growth to remain 5.8% as acceleration, and price levels hinder domestic demand, The annual inflation have stayed above the RBI’s tolerance level which is 6%. The report said even though the inflation have been above 6% it is still in control in comparison to other developed economies. Inflation reflects higher food prices. 

The Reserve Bank of India (RBI) in order to control the rising inflation and bring it back to the tolerance level has raised the interest rates. According to cebr, the public debt will be burdened by higher borrowing cost. It has been reported that the center’s debt stands at 83.4% of GDP, with a high fiscal deficit in this financial year which amounts to 9.9%  of GDP. Cebr further added that fiscal consolidation is required in order to make sure that the debt levels do not destabilize the country. 

As we are going toward 2023 we are witnessing a change in global diplomacy which is fuelled by war and tightening economic policies. As the world economy will be entering into 2023 with a negative outlook of economic recession. The point of view of India is way too important for most of the powerful nations as India is the only big nation that stands at a true neutrality in the Russia -Ukraine war. We can witness more and more Free Trade Agreements on the future which will be better for the Indian economy