India is on course to be the third-largest economy by 2030, trailing the US and China, and headlining emerging markets that are poised to account for more than half the global gross domestic product within the next decade, Capital Economics said.
India recently overtook the UK to become the world’s fifth-largest economy at market exchange rates.
“Looking ahead, India looks set to continue its march up the global rankings,” Shilan Shah, senior economist at Capital Economics said in a note on September 6.
“We think India will overtake Germany and Japan to become the third largest economy in the world within the next decade.”
While the Indian economy is likely to suffer long-term scarring from the coronavirus pandemic, a relatively positive outlook for demographics and productivity should ensure that GDP growth remains much stronger than elsewhere, the economist added.
Capital Economics projects an average real GDP growth of six percent per year for India from 2022 to 2030.
Emerging markets with rapid population growth, healthy manufacturing sectors or those that stand to benefit from a greening of the global economy will jump up the GDP league table over the next decade, the house said.
India’s pandemic-hit economy has recovered but faces headwinds from inflation, monetary tightening and global uncertainties.
The Reserve Bank of India is confident it will handle the monetary policy without any major blips, finance minister Nirmala Sitharaman said on September 7. The central bank has in recent months raised interest rates sharply to curb red-hot inflation after keeping policy ultra-accommodative for two years amid the coronavirus outbreak.
Prime minister Narendra Modi’s administration is striving to boost growth by focusing on infrastructure, facilitating private investments and economic reforms. Modi has aimed at making India a developed economy in the next 25 years.
The finance minister has said that the government will focus on equitable growth.
Capital Economics expects India’s nominal GDP per person to rise to $5,160 by 2030 against an estimated $22,490 for China and $99,480 for the US.
India’s GDP per person stands at $2,520, according to International Monetary Fund (IMF) data.