Weak rupee to delay India's $5T goal to 2029: IMF
What's the story
India's ambition of becoming a $5-trillion economy has been pushed back by a year, owing to the depreciation of its currency. An analysis of the International Monetary Fund's (IMF) World Economic Outlook database shows that India's economy is now expected to cross the $5-trillion mark in 2029, instead of 2028 as estimated earlier. The change comes despite an increase in projections for economic output in rupee terms.
GDP adjustment
IMF revises India's nominal GDP for 2028
The IMF has revised its estimate of India's nominal GDP for 2028 to $4.996 trillion, from an earlier projection of $5.1 trillion made six months ago.
This revision takes into account the impact of currency depreciation on India's dollar-denominated GDP, which plays a key role in determining the country's global economic ranking.
Future outlook
Delay in $5 trillion mark due to exchange-rate changes
The IMF's October projections estimate India's economy at $4.06 trillion in 2026, rising to $4.52 trillion in 2027, and surpassing the $5-trillion mark by 2029.
However, this delay is more due to changes in exchange-rate assumptions than a decline in India's nominal economic growth.
The IMF now expects the rupee to average at 95.5 per dollar in 2028, up from its April projection of 93.3 per dollar.
Currency impact
Indian rupee depreciates over 5% since start of the year
The Indian rupee has depreciated over 5% since the start of the year, closing at 96.73 on Friday.
Meanwhile, India's nominal GDP in domestic currency is expected to hit ₹477.1 lakh crore in 2028, a slight increase from the earlier estimate of ₹471.9 lakh crore made in April.
However, when converted into dollars, 2028's economic output has been revised downwards by around $63 billion due to currency depreciation effects.
Ranking shift
India on track to surpass the UK, Japan
Despite the delay in reaching the $5-trillion milestone, India is still expected to become the world's fourth-largest economy by 2027, behind the US, China, and Germany.
The IMF's latest projections put India's GDP at $4.52 trillion in 2027, just ahead of the UK's $4.49 trillion and Japan's projected $4.47 trillion.
This would mark a major shift in global economic rankings but exchange-rate fluctuations could still impact these projections given their close proximity.