India will have a $7 trillion economy by 2030

India can aim for a $7 trillion economy by 2030, according to The Indian Economy: A Review, authored by V. Anantha Nageswaran, the government's chief economic adviser, and his team of economists.

The 74-page document is “not the economic report of India prepared by the Department of Economic Affairs (DEA)” but rather a document that takes stock of the state of the Indian economy and its development over the last 10 years.

India's development into a $7 trillion economy over the next six to seven years (by 2030) would be a significant milestone in achieving quality of life and living standards that meet and exceed Indians' expectations, the review said the economy is further explained.

The review goes on to say that reforms undertaken by the central government over the past decade have laid the foundation for a resilient, collaborative governance ecosystem and restored the economy's ability to grow healthily.

“There are good reasons to believe that India's economic and financial cycles have become longer and stronger. Consequently, India is poised for continued strong growth in the coming years,” the review said.

GDP growth at 7% in fiscal year 2025

The Chief Economic Adviser (CEC) has estimated the growth rate of the Indian economy at 7 per cent in FY2025 after growing at or above 7 per cent in 2023-2024. This would be fueled by robust domestic demand despite the risks and uncertainties in the global economic landscape.

“If the FY25 forecast proves correct, this would be the fourth year post-pandemic in which the Indian economy will have grown by 7 per cent or more. This would be an impressive achievement and a testament to the resilience and potential of the Indian economy. This bodes well for the future,” Nageswaran said in the review.

Meanwhile, according to the National Statistical Office (NSO), the Indian economy is expected to grow at 7.3 per cent in 2023-24, while the Reserve Bank of India (RBI) has forecast a growth rate of 7 per cent for the current financial year.

“It is one thing for India to grow at 8 to 9 percent when the global economy is growing at 4 percent, but it is another thing to grow at 7 percent or more when the global economy is struggling to grow at 2 percent .” cents,” Nageswaran added.

What drove demand?

According to the review, robust domestic demand has propelled the economy to a growth rate of over 7 percent over the past three years.

“The robustness of domestic demand, particularly private consumption and investment, is due to the reforms and policies implemented by the government over the last decade,” the economic review said.

“The supply side has also been strengthened through investments in physical and digital infrastructure and measures to boost production. These have collectively provided new impetus to economic activity in the country,” the review said.

“Only the increased risk of geopolitical conflicts is a cause for concern. Priority areas for future reforms include skills, learning outcomes, health, energy security, reducing the compliance burden on MSMEs and gender equality in the world of work,” it said.

Challenges for the Indian economy

The CEA also highlighted the challenges facing the Indian economy and said that “recent events in the Red Sea may have raised concerns about dependence on global supply chains, further exacerbating slower global trade growth in 2023.”

“It won’t be easy to export your way to growth. The global economy is struggling to sustain the post-coronavirus recovery as it has been rocked by multiple shocks. In 2024, supply chain disruptions have returned,” the CEA said.

Nageswaran further said: “The emergence of artificial intelligence (AI), with the profound and troubling questions it raises for the growth of services trade and employment as the technology brings the cost competitiveness advantage enjoyed by countries exporting digital services, could destroy… Third and probably the most important is the challenge of the energy transition.”

The audit also noted that concerns about rising temperatures have led to a single-minded focus on reducing carbon emissions, although it found that emissions of greenhouse gases, particularly carbon, are the most significant causal factor.

With input from agencies