India is expected to become a $7 trillion economy by 2030, Chief Economic Advisor V Anantha Nageswaran predicted on Tuesday. He said the country’s GDP size is likely to be $3.5 trillion by March 2023 and historically, over the last 30 years, India’s dollar-GDP has grown at 9 per cent in spite of the rupee’s depreciation. There are episodes, the CEA said, where the rupee has strengthened, and in that period India’s GDP has grown at a double-digit rate.
“So in general, if we take 10 per cent growth rate in dollar terms, the value doubles in seven years. So if India’s dollar GDP grows at 10 per cent per annum from April 2023 onwards, it could be a 7 trillion economy by 2030,” Nageswaran said while speaking to Business Today’s Managing Editor Siddharth Zarabi.
The CEA, however, cautioned that these estimates cannot be taken as precise guidance and ultimate outcomes are subject to many factors beyond one’s control.
Earlier in the day, Nageswaran presented the Economic Survey 2022-23. According to the survey, India is likely to witness GDP growth of 6 to 6.8 per cent in 2023-24, depending on the trajectory of economic and political developments globally. However, many economists believe that GDP growth is likely to be at the lower end.
When asked how confident he was about 6.8 per cent growth, the CEA said the economic forecasts are conditional statements. “You make certain assumptions and if the assumptions materialise, the forecast will materialise – because it is subject to so many influences, domestic and external”.
He said the range is important and even the survey says the downside risks are slightly higher than the upside to the baseline number of 6.5 per cent. “If events like a rise in commodity prices, interest rate hikes in the US, and a strengthening dollar don’t happen then the chances of India achieving 6.5 per cent growth are better,” he said.
Asked about inflation and when it will come down, the CEA said India was relatively better off when it came to inflation. “India’s inflation peaked at 7.8 per cent in April 2022 and since then it has come down and stands at 5.7 per cent in December 2022. Our target range is 2 to 6, so the deviation from the target was not as big as in some of the advanced economies even today,” he said.
Nageswaran said if the global economy experiences slowdown and commodities prices well behaved in 2023-24, then India’s inflation rate will continue to come down and may even come below 5 per cent and get closer to the mid-point of RBI’s target range of 2-6 per cent.
When asked by when it can happen, the CEA said he did not have any forecast on this. “We go by the RBI’s forecast and the Reserve Bank of India predicts that rate will come below 5 per cent in the first quarter of the next financial year.”