India is likely to become the third largest economy in the world by 2029, a research paper of SBI said on Saturday. India has already overtaken the UK to become the fifth largest economy. The paper said that India had surpassed the UK as the 5th largest economy as early as December 2021 itself and not recently.
The SBI’s Economic Research Department predicted that India would surpass Germany in 2027 and most likely Japan by 2029 at the current rate of growth and become the world’s 3rd largest economy–a movement of 7 places upwards since 2014 when India was ranked 10th. This is a remarkable achievement by any standards, the report said.
For Q1 FY 2022-23, India registered GDP growth at 13.5%. The report said, at this rate India is likely to be the fastest growing economy in the current fiscal.
“Interestingly, even as estimates of India’s GDP growth rate for FY23 currently range from 6.7% to 7.7%, we firmly believe that it is immaterial. In a world that is ravaged by uncertainties, we believe 6% to 6.5% growth is the new normal,” the report noted.
Further, the report suggested updating the IIP (Index of industrial production) basket of India which is currently composed of 2021 products. Citing an example, the SBI report said that the current IIP basket misses handset exports that are now produced by companies like Foxconn in India. Moreover, the steel production by select companies has undergone locational shifts which are not a part of the IIP sample.
The report predicted that India will soon be the beneficiary as China slows down in terms of new investment intentions. “Global tech major Apple’s recent decision to shift part production of its flagship iPhone 14 model for worldwide shipping from India bears testimony to such optimism! The move by Apple, the most recognisable face of tech-infused innovation in the last two centuries, that captures aspirations of an upwardly mobile population should open the floodgates for other major conglomerates to follow suit,” the report added.
At the beginning of the 21st century, China embarked on an accelerated growth path occupying the second largest economy tag. So if India continues to adopt the right policy perspective and a realignment in global geopolitics, the current estimates might even undergo an upward revision, the SBI report noted.
News source: Live mint