In order for India to realise its economic aspirations of becoming Viksit Bharat by 2047, when the country celebrates 100 years of its independence, the GDP growth rate would need to be significantly higher that its current estimates for FY26, the Economic Survey 2024-25 stated.
The Economic Survey, tabled by Finance Minister Nirmala Sitharaman, in the Parliament today, stated that India needs a growth rate of 8 per cent for a decade or two to achieve its vision.
“To realise its economic aspirations of becoming Viksit Bharat by the time of the centenary of independence, India needs to achieve a growth rate of around 8 per cent at constant prices, on average, for about a decade or two. While the desirability of this growth rate is unquestionable, it's important to recognise that the global environment – political and economic – will influence India's growth outcomes,” the survey stated.
It must be mentioned that the survey estimates India’s GDP to grow in the range of 6.3-6.8 per cent for FY26. The survey said that there are many upsides to domestic investment, output growth and disinflation in FY26, but there are equally strong, prominently extraneous downsides too. “”Nonetheless, the fundamentals of the domestic economy remain robust, with a strong external account, calibrated fiscal consolidation and stable private consumption,” it said.
Talking about India’s medium-term outlook and its aspirations to achieve ‘Viksit Bharat’, the survey highlighted the projections of World Economic Outlook (WEO) of the International Monetary Fund, which it called “sanguine”.
“The IMF WEO projects India to become a $5 trillion economy by FY28 and reach a size of $6.307 trillion by FY30. This translates into an annual nominal growth rate of nearly 10.2 per cent in USD terms for FY25 to FY30. To put this in context, in the thirty years between FY94 and FY24, India's dollar gross domestic product (GDP) grew at a compounded annual rate of 8.9 per cent. So, the IMF expects India to grow at a significantly higher rate of 10.2 per cent in dollar terms in the next five years,” it said.
In rupee terms, India’s nominal GDP grew at a compounded annual rate of 12.4 per cent in the three decades ending FY24, it said, adding that the IMF projects India’s nominal GDP to grow at 10.7 per cent annually.
“So, in effect, given the projected growth rate of only 10.2 per cent in dollar terms, the Fund expects the rupee to weaken, on average, only by 0.5 per cent per annum in the next five years, compared to the 3.3 per cent annual depreciation experienced in the three decades up to FY24…the Fund also projects that India's current account deficit will rise gently and gradually to 2.2 per cent of GDP by FY30,” it said.
THE CHINA ANGLE
While addressing the elephant in the room, the survey also spoke about the dragon in the room. China, it acknowledged, will have a bearing on the growth projections.
China’s dominance vis-a-vis the dependency of the global economy for energy transition efforts is critical, it said. “India has ambitious goals for energy transition despite being one of the lowest per capita emitters of greenhouse gases. Dependence on China-made goods to achieve that transition enhances the complexity of the challenge for India,” it said.