India could become third largest economy by 2027: IMF

NEW DELHI: Dr. Gita Gopinath, the Deputy Managing Director of the International Monetary Fund (IMF), expressed optimism that India could become the third-largest economy by 2027.

During an interaction with journalists, Gopinath highlighted India’s stronger-than-expected growth in the last fiscal year, which has positively influenced the IMF’s forecast for the current year.

She noted that private consumption is showing signs of recovery, which is a key factor in the positive outlook.

Gopinath, who briefly served as an advisor to the Chief Minister of Kerala, explained that private consumption growth, which was around 4per cent last year, is expected to increase, particularly driven by a recovery in rural consumption.

Two-wheeler sales

Indicators such as rising two-wheeler sales and fast-moving consumer goods (FMCG) sales are already reflecting this trend.

Gopinath added that better monsoons have led to expectations of improved harvests, which should boost agricultural incomes and further support rural consumption recovery.

Her remarks follow the IMF’s recent revision of India’s growth projection for the financial year 2024-25 to 7% in its ‘World Economic Outlook’ report.

This upward revision is based on new data, including FMCG and two-wheeler sales, as well as favorable monsoon conditions.

Govt’s estimates

Notably, this projection is more optimistic than the Indian government’s estimate of 6.5 per cent growth in the economic survey.

The IMF report stated, “The forecast for growth in emerging markets and developing economies has been revised upward; this increase is powered by stronger activity in Asia, particularly China and India.

The forecast for growth in India has also been revised upward to 7 per cent this year, reflecting carryover from upward revisions to growth in 2023 and improved prospects for private consumption, particularly in rural areas.”

Earlier this week, IMF Executive Director Krishnamurthy V. Subramanian also projected that India could become a $55 trillion economy by 2047.

He emphasised that achieving this ambitious goal would require diligent efforts from both state and central governments to implement growth-oriented policies, which could enable the country to achieve an 8 per cent GDP growth rate.