India to become 3rd largest economy by 2030
What's the story
India is set to become the world's third-largest economy by 2030, with a projected GDP of $7.3 trillion, an official statement said on Monday. The country has already surpassed Japan to become the fourth-largest economy globally, with a current GDP of $4.18 trillion. The Reserve Bank of India (RBI) has revised its GDP growth forecast for FY2025-26 from an earlier estimate of 6.8% to a more optimistic 7.3%.
Growth factors
Economic growth driven by domestic consumption
India's economic growth has been primarily driven by strong domestic consumption. The country's real GDP grew by 8.2% in the second quarter of FY2025-26, up from 7.8% in the previous quarter and 7.4% in Q4 of 2024-25. This growth comes despite global trade uncertainties and policy challenges, highlighting India's resilience amid these external pressures.
Revised forecast
RBI's revised GDP growth forecast reflects India's economic resilience
The RBI's revised GDP growth forecast for FY2025-26 reflects India's economic resilience. The upward revision from an earlier estimate of 6.8% to a more optimistic 7.3% underscores the country's robust domestic demand, income tax and goods and services tax (GST) rationalization, declining crude oil prices, front-loading of government capital expenditure (CAPEX), and favorable monetary and financial conditions amid low inflation.
Economic indicators
Economic activity remains strong amid global uncertainties
Despite global trade and policy uncertainties, India's economic activity remains strong. High-frequency indicators show inflation is below the lower tolerance threshold, unemployment is on a declining trajectory, and export performance continues to improve. Financial conditions have also remained favorable with robust credit flows to the commercial sector and firm demand conditions supported by further strengthening of urban consumption.
Future goals
India aims for high middle-income status by 2047
The official statement emphasized India's ambition to attain high middle-income status by 2047, the centenary year of its independence. This vision is being built on strong foundations of economic growth, structural reforms, and social progress. The RBI's upward revision of India's GDP growth forecast is a testament to these efforts and the country's potential to sustain its economic momentum in the coming years.