In a recent report, IDBI Capital has said that the Indian economy is set to add USD 1 trillion to its gross domestic product (GDP) every 1.5 years over the next six years. It added that the country is on the verge of a major transformation, aiming to become a USD 10 trillion economy by 2032, positioning itself as the third-largest economy globally by 2030.
"By adding USD one trillion every 1.5 years going forward, India is forecasted to emerge as the third-largest global economy over the next six years," said the report. The report noted that this accelerated growth will be driven largely by the manufacturing sector, which is expected to contribute 32 per cent to the incremental gross value added (GVA).
However, the year-on-year (YoY) growth in economic activity, as measured by the Icra Business Activity Monitor - an Index of high-frequency indicators, declined to a 29-month low of 5.3 per cent in August 2024 from 9.8 per cent in July 2024, led by the deterioration in the performance of as many as 13 of the 16 constituent indicators between these months.
Icra report added that excess rains in August 2024 impacted mining activity, cooled off power demand, and likely weighed on monthly retail footfalls. Further, the Index contracted by 1.0 per cent on a sequential basis in August 2024, in contrast with the expansion of 3.2 per cent seen in August 2023. The early data for September 2024 remains tepid, amid a contraction in the average daily vehicle registrations, electricity demand, and fuel sales compared to the year-ago levels.
India reached USD 2 trillion in 2017, just seven years later, and USD 3 trillion in 2020. While, as per the report, the Covid-19 pandemic slowed growth slightly, extending the timeframe to USD 4 trillion by the year-end of 2024. After reporting an 8.2 per cent growth in FY24 despite facing a challenging global macroeconomic environment, India is now aiming to achieve an ambitious USD 5 trillion economy target and ultimately to USD 7 trillion and USD 10 trillion.
While speaking at the annual forum of the Public Affairs Forum of India (PAFI), BVR Subrahmanyam, Chief Executive Officer (CEO), Niti Aayog said that the country is at its inflection point to become a global powerhouse. He added, “Our economy should easily double by 2023.” Subrahmanyam emphasised that by 2047, India will be among the world's youngest nations demographically, poised for prosperity, with a projected per capita income of around USD 18,000 to USD 20,000.
By mid-2025, many basic issues are anticipated to be resolved, setting the stage for robust economic advancement, Subrahmanyam stated. He added, "India stands at a pivotal moment in its journey toward becoming a global powerhouse, with projections indicating an economy of USD 38 trillion and a youthful population that strengthens its global position."
Better Infra Required
According to experts, urban development and infrastructure are crucial, with cities designed as economic hubs to drive growth. There is a need for the private sector to lead in innovation and investment, supported by an enabling environment that attracts both portfolio and direct investments. Additionally, reforming supply chains is essential for navigating globalisation, while India’s emphasis on Atmanirbharta fosters trade on its terms.
IDBI Capital report also highlighted the role of initiatives like Make in India, which as per the report are designed to strengthen India's manufacturing base and transform the country into a global manufacturing hub. The data also highlighted that India took 63 years, from 1947 to 2010, to reach a GDP of USD 1 trillion.
Between 2024 and 2032, as per the report, India is expected to hit USD 10 trillion in GDP, driven by strong manufacturing demand, export potential, and favourable government policies such as Production Linked Incentive (PLI) schemes. The report also projected India will overtake major global economies in manufacturing, surpassing countries like the United States, China, Germany, South Korea, and Japan in terms of the Industrial Production Index (IIP).
Subrahmanyam mentioned, "By establishing itself as a solutions hub for engineering and promoting ‘Make in India"’ as a hallmark of quality, India can create a strong base for global markets. Ultimately, reforms at the state level and a commitment to cooperative federalism will ensure inclusive growth, positioning India to emerge as a global giant and lead to a prosperous future."
More Jobs Needed
Earlier this year, the International Labour Organisation (ILO) in its recent report stated that the unemployment rate of Indian youths is higher than for adults. The youth unemployment rate has been rising over the past several decades– from 5.6 per cent in 2000 to 6.2 per cent in 2012 and then increasing threefold, to nearly 18 per cent in 2018 and reaching around 15.1 per cent in 2020
After expressing its concerns about a report of the ILO, the Modi government has questioned a Citigroup report, which revealed that India “will struggle to create sufficient employment opportunities” even with a seven per cent economic growth rate. The Union Ministry of Labour and Employment said that the report fails to consider the positive trends and comprehensive data from official sources, such as the Periodic Labour Force Survey, the Reserve Bank of India and the Employees Provident Fund Organization, which show consistent improvements in key labour market indicators.
“The ambition for our country's future is rooted in the vision of inclusive growth, ensuring that every individual could dream and achieve, with job creation playing a vital role in that journey. We need to create more job opportunities to support our ambitions and foster sustainable development for all. We aim to provide essential services—education, healthcare, and infrastructure—to all citizens across our 600,000 villages,” said Vini Mahajan, Secretary, Department of Drinking Water and Sanitation, Union Ministry of Jal Shakti at PAFI event,
Mahajan added that as companies expand their capacities, bridging the skill gap remains a critical challenge. She underscored the significance of women’s empowerment through self-help groups (SHGs) to enhance economic participation. Meanwhile, India’s ambition to become the third-largest economy by 2026-2027 necessitates a cohesive grand strategy, prioritising the resolution of the middle-income trap as a critical challenge to our long-term aspirations.
