India's economy to quadruple to $16 trillion by 2042: Study
What's the story
Indian economy is on the cusp of a major transformation that could redefine wealth creation in the next two decades. The prediction comes from Motilal Oswal Financial Services's 30th Wealth Creation Study. The study projects India's GDP will quadruple from $4 trillion in 2025 to a whopping $16 trillion by 2042, mirroring the country's economic growth over the past 17 years.
Economic growth
Wealth creation to accelerate in the coming years
The study highlights a major acceleration in absolute wealth creation. While the last 17 years saw an addition of $3 trillion to India's GDP, the next phase is expected to add $12 trillion. This fourfold increase in absolute value creation is likely to create a strong "wealth effect," boosting consumption, investment, and corporate profitability across sectors.
Sectoral impact
Financial services sector to benefit from wealth creation
The financial services ecosystem is expected to be a major beneficiary of this economic transformation. The study estimates that cumulative household savings over the next 17 years could reach $47 trillion, creating a massive opportunity for the Banking, Financial Services and Insurance (BFSI) sector. Wealth management firms, asset management companies, stock broking platforms, capital market intermediaries, non-banking financial companies (NBFCs), banks and insurance companies are likely to play a key role in channeling these savings into productive investments.
Income growth
Rising income levels to boost consumer spending
India's per capita GDP is expected to quadruple from around $2,600 today to nearly $10,400 by 2042. This income transition is likely to push large segments of the population into higher consumption brackets, giving a sustained boost to consumer discretionary sectors. The study notes strong demand expansion in categories such as white goods, quick commerce, food technology platforms and travel and tourism services as discretionary spending rises.
Sectoral growth
Automobile and real estate sectors to witness growth
The automobile sector in India has a long way to go with penetration levels of cars, SUVs, two-wheelers and three-wheelers still much lower than those in other economies with similar per capita income. As affordability improves and financing deepens, vehicle ownership is expected to rise steadily across urban and semi-urban markets. The real estate sector is also likely to benefit from this economic transformation with strong demand for credible developers especially in premium/luxury housing segments.