Can India be a $20T economy by 2036?
What's the story
India has the potential to become a $20 trillion economy by 2036, according to a report by Equirus. The domestic brokerage firm says this ambitious target can be achieved if India can raise its underlying rupee growth to around 14.2% and sustain an annual rupee appreciation of about 3-3.6%. The report lays out a comprehensive 20-step reform agenda aimed at achieving this goal.
Growth potential
From $3.7T to $20T
Equirus's report suggests that the proposed reforms could not only accelerate India's growth but also improve its external balance.
The country has already made remarkable progress, taking 67 years since independence to reach its first $2 trillion GDP.
However, going from this base of about $3.7 trillion to a $20 trillion economy would require an expansion of some 5.5 times and sustained nominal dollar growth of around 18% annually, well above the historical trend of 10-11%.
Sectoral shift
Services sector to drive growth
The report highlights that the composition of growth will be as important as its pace, with services expected to be the main driver.
Currently accounting for some 54% of GDP, the services sector would need to increase its share beyond 65%, growing from around $2 trillion to over $11 trillion.
The report also notes that manufacturing could be limited by a more protectionist global environment, while agriculture's share may decline with urbanization.
Reform agenda
Proposed reforms cover multiple sectors
The proposed reforms cover a wide range of sectors including real economy, capital markets, human capital, services, and urban governance.
Some key suggestions are bringing fuel under GST, enforcing state capital-expenditure floors, listing the Railways and creating an Indian sovereign fund.
Other recommendations include expanding private education capacity, reviving private-sector R&D and deepening corporate bond markets, while reducing tax-related working-capital frictions.
Financial benefits
Reforms could unlock trillions in working capital
The report estimates that scrapping advance tax could free up some ₹10 trillion of working capital, while a flat 5% TDS could unlock another ₹13.4 trillion.
Services-focused reforms such as a National GCC policy to increase global capability centers from over 1,800 to 5,000 could have an economic impact of $470-600 billion and create 20-25 million jobs.
Promoting tourism could also add some $21 billion annually in foreign exchange receipts.
Implementation strategy
Execution across multiple fronts critical for success
The Equirus report estimates the reform package would yield some ₹7.9 trillion in annual direct gains against costs of around ₹3.4 trillion, implying a net gain of ₹4.5 trillion.
It concludes that reaching the $20 trillion milestone will depend on execution across multiple fronts rather than any single policy lever.
This underscores the need for a comprehensive and coordinated approach to economic reform in India.