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India to become $5 trillion economy, 3-largest by 2027

2023-10-11

Reserve Bank Deputy Governor Michael D Patra has projected that India is poised to become a $5 trillion economy and secure the third spot in the world's largest economies by market exchange rates by the year 2027. Patra attributed this anticipated economic growth to India's demographic advantage and the rapid development of its financial sector.

Speaking at the 16th SEACEN-BIS High-Level Seminar hosted by the National Bank of Cambodia Patra emphasised the prevailing belief that the global economic centre of gravity is shifting eastward towards Asia over the next two decades or more.

Patra cited the International Monetary Fund’s (IMF) Regional Economic Outlook for Asia and the Pacific which forecasts that Asia will contribute approximately two-thirds of global economic growth in 2023. He also highlighted that India is set to account for one-sixth of the world’s output growth in 2023 and 2024.

In terms of market exchange rates, Patra noted that India currently stands as the fifth-largest economy globally and the third-largest when considering purchasing power parity. Patra stated Our assessment is that by 2027 India will be a $5 trillion economy and the third-largest in the world even by market exchange rates. A key driver in this transformation is likely to be the window of a demographic dividend that opened up in 2018 and will probably last till the 2040s going by fertility and mortality rates.