India could be $20 trillion economy by 2040, chief economic advisor says

India’s economy could expand to $20 trillion in a couple of decades if the gross domestic product doubles every seven years after hitting the $5 trillion mark in five years, chief economic advisor V Anantha Nageswaran said on June 8.

“India is forecasted by IMF to cross $5 trillion by 2026-27 and if the dollar GDP of the country doubles every seven years, we will be at $20 trillion GDP by 2040 with a per capital income of close to $15,000,” Nageswaran said at an event today.

India’s economy growth trajectory has been derailed by the Covid-19 pandemic and the damage caused by Russia’s invasion of Ukraine which has sent commodity prices surging. The economy is projected to have barely grown over the last couple of years.

Still, India has emerged out of the previous decade with its financial system repaired, with corporate balance sheet strong, the finance ministry official said.

Meanwhile, some of the structural reforms of the government might have been temporarily overshadowed by the pandemic and the geopolitical conflict, but once these clouds recede, the reforms will begin to manifest their benefits in enhancing India’s potential growth in the decade to come, the chief economic advisor said.

India’s central bank today pegged FY23 growth at 7.2 percent, retaining its previous forecast. It hiked the policy repo rate by 50 basis points to 4.9 percent as expected as it seeks to curb inflation that has spiked in the recent months.

Also read: RBI raises repo rate by 50bps to 4.9% to fight inflation pressure

In his statement, Governor Shaktikanta Das said data for April and May suggested India's economic recovery "remains firm, with growth impulses getting increasingly broad based".

The World Bank has slashed its growth forecast for India for the current financial year to 7.5 percent, a hefty 1.2 percentage points down from its previous forecast of 8.7 percent.