According to the Ministry of Finance, India is on track to become the world's third largest economy, with an expected Gross Domestic Product (GDP) of 5 trillion in the next three years. As of January 29, the country's economy is reported to be $3.7 trillion, representing significant growth from its status as the 10th largest economy a decade ago, with a GDP of $1.9 trillion.
The Ministry of Finance credits this significant development to a series of substantive and incremental reforms that have not only contributed to economic growth but also strengthened the country's economic resilience against unexpected global shocks. These reforms are expected to continue to propel India towards its target, and the ministry is expected to grow to $7 trillion by 2030.
In addition to economic reforms, government investment in infrastructure has seen a significant increase, rising from Rs 5.6 lakh crore in FY15 to Rs 18.6 lakh crore in FY24. The investment is part of a broader strategy to sustain and enhance economic growth, which has remained strong with a growth rate of more than 7 percent over the past three years.
„This ten-year journey has been marked by a number of substantial and incremental reforms that have contributed significantly to the country's economic progress,” it said.
The Finance Ministry's review report, led by Chief Economic Adviser V Ananda Nageswaran, acknowledges the challenges posed by global economic conditions, including re-emerging supply chain disruptions in 2024. Real GDP growth will be close to 7 per cent in FY25 and may rise above 7 per cent by 2030.
Also, the government has set an ambitious target of making India a 'developed country' by 2047, which entails a continuation of reforms and full participation of state governments. The ministry emphasizes the importance of reforms at all levels of governance, including districts, blocks and villages, to ensure they are citizen-friendly and supportive of small businesses.
„However, the government has set a lofty target of becoming a 'developed country' by 2047. As the reform journey continues, this target can be achieved,” it said.
The strength of domestic demand is a driving force behind the current growth rate of the economy, and with financial sector and other structural reforms, there is considerable potential for the economy to grow above 7 percent in the coming years. However, geopolitical conflicts remain a risk that could impact this trajectory.
„The strength of domestic demand has driven the economy to a growth rate of 7 per cent over the past three years… In FY25, real GDP growth will be close to 7 per cent,” the study said. However, there is a significant chance that the growth rate will rise above 7 percent by 2030.
Also, under reasonable assumptions regarding inflation differentials and exchange rates, India could aspire to become a $7 trillion economy in the next six to seven years (by 2030),'' it said.
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