According to Sitharaman, India's economy will reach $5 trillion by 2027-28, three years after Modi's 2025 target

“It is believed that we will certainly be able to achieve the third largest economic target which the honorable Prime Minister has spoken about with great confidence,” Sitharaman said while speaking at the Vibrant Gujarat Summit in Gandhinagar on Wednesday.

“This is because the people of India have overcome the post-COVID challenges and put the recovery on a solid footing,” she added. “Therefore, it is possible that we will be the third largest country by 2027/28, but also that our GDP will exceed the $5 trillion mark by then.”

The finance minister said it is “a conservative estimate” that India's economy will cross the $30 trillion mark by 2047, the year India's independence turns 100 years old.

Sitharaman's 2027-2028 deadline contradicts what various ministers in the Modi government – including Prime Minister Narendra Modi himself – have said in the past. Just last month, Home Minister Amit Shah loudly said that India would be a $5 trillion economy by the end of 2024-25.

Modi had made the same claim in 2018. This was, of course, said before the COVID-19 pandemic and the resulting contraction of the Indian economy in 2020-21.

The truth of the matter could lie somewhere between Modi's goal and Sitharaman's. The IMF estimates that the Indian economy will touch the $5 trillion mark by 2026-27.

Calculations from ThePrint confirm this. The first advance estimates of GDP for 2023-24 Approved The Ministry of Statistics and Program Implementation earlier this month pegged India's nominal GDP at Rs 296.6 million. At current exchange rates, this amounts to $3.57 trillion.

The economy would have to grow at a nominal rate of about 40 percent if it had to reach $5 trillion in sales by 2024-2025 – a nearly impossible task.

To reach Sitharaman's $5 trillion target by 2027-28, the nominal growth rate would need to be 8.76 percent every year by then – significantly slower than the post-COVID average nominal growth rate of about 11 percent that hit India has seen.

If India maintains this or even a slightly slower growth rate, it should reach the $5 trillion target before 2027-28.

The other variable here is the exchange rate. If the rupee depreciates rapidly over the next few years, the date by which the rupee value of India's nominal GDP reaches $5 trillion could shift. On the other hand, an appreciation of the rupee would bring forward this date.

(Edited by Gitanjali Das)

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