Days after stating that India's $5-trillion economy dream will be pushed further by three years, the global financial body International Monetary Fund (IMF) has now revised its World Economic Outlook Database, which was released in April, saying India can achieve the $5 trillion economy target by the year 2026-27.
Interestingly, the current projections by the global financial body are almost the same as the Modi-led government's target of achieving the coveted status by the fiscal year 2025-26 or a year later. The IMF's current GDP projections are believed to be based on the changing rupee-dollar value.
The IMF dataset on the GDP (Gross Domestic Product) at current prices for India shows the current GDP at $3.5 trillion, which is expected to rise to $3.8 trillion in 2023-24 and $4.2 trillion in 2024-25. India's GDP, as per the IMF estimates, will touch $4.6 trillion in the year 2025-26, and finally cross the $5-trillion mark in 2026-27 by achieving the GDP of $5.1 trillion. Interestingly, the IMF estimates mark India's GDP to zoom to $5.5 trillion in just one year in 2027-28.
In its April estimates, IMF had said India's GDP will rise to $4.92 trillion by FY28, which meant the country would touch the $5 trillion economy mark in the financial year FY29. The global monetary body has not released its estimates for India beyond FY28.
Prime Minister Narendra Modi, in the year 2019, had envisioned making the country a $5 trillion economy by the year 2024-25, and urged the countrymen to make it an economic powerhouse and the world's third-largest economy.
The Centre this year, however, extended this target by a year, primarily due to the unprecedented Covid crisis and economic downturn caused by the pandemic. The government now aims to become a $5 trillion economy by FY 2025-26 or the next year by achieving 8-9% sustained GDP growth.
"If we continue to retain the path of 8-9 per cent real GDP, it would translate into 8 per cent dollar GDP growth. If we extrapolate that we should be at $5 trillion by 2025-26 or 2026-27," chief economic adviser V Anantha Nageswaran had said during the finance minister's post Budget 2022 interaction on February 1.
The IMF has projected India to grow by 8.2% in the financial year 2022-23, lower than its earlier forecast of 9%, because of Russia's invasion of Ukraine, high inflation due to fuel and food price rises, which would play a key role in dragging the economic growth back.
It expects India's GDP to be 6.9% in 2023-24, 2 percentage points down compared to 7.1% projected earlier. The GDP is estimated to grow at 7% during 2024-25 and 2025-26 as well. In the year 2026-27, when the country is expected to achieve the $5 trillion economy target, India is expected to grow at 6.5% and 6.2% the next year.
India is one of the fastest-growing economies and is currently ranked as the world’s 6th largest economy. To fulfil the $5 trillion economy dream, the government aims to achieve $1 trillion from agriculture and allied activities, $1 trillion from manufacturing and $3 trillion from services.
On the global front, the IMF has said the growth is projected to slow from an estimated 6.1% in 2021 to 3.6% in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and 2023, respectively, than in the January World Economic Outlook Update.
Notably, the World Bank had also revised India's GDP for FY23 lower to 8% from 8.7% projected earlier. However, both these estimates are higher than the Reserve Bank of India’s GDP estimates, which in its Monetary Policy Report for April 2022, had projected India's real GDP growth at 7.2% in 2022-23.
