India is ready to become the 5th largest Economy in the World by 2025 and 3rd largest by 2030
India is one of those countries that have been the worst affected due to coronavirus but the good news is that it’ll become the world’s fifth-largest economy by 2025. By 2030 it is going to be the third-largest economy. As per the news source from the Centre for Economics and Business Research (CEBR), India will surpass Germany in terms of GDP by 2027 and Japan by 2030.
India, which has been pushed back to being the world’s sixth-biggest economy in 2020, will now overtake the UK to become the fifth largest in 2025 & further India will fight for the third position by 2030. In 2019, India had overtaken the UK in 2019 by scoring the 5th position but relegated back to 6th position in 2020, the reason being Coronavirus. Due to the lockdowns everywhere it had stopped most economic activities in India, wherefrom April-June quarter GDP took a massive hit of 23.9 percent below its 2019 level.
The CEBR forecasts that the Indian economy will expand by 9% in 2021 and by 7% in 2022. “Growth will naturally slow as India becomes more economically developed, with the annual GDP growth expected to sink to 5.8% in 2035,” says the report. “This growth trajectory will see India become the world’s third-largest economy by 2030, overtaking the UK in 2025, Germany in 2027, and Japan in 2030,” it said. The UK-based think tank forecast that China will overtake the US to become the world’s biggest economy in 2028, five years earlier than previously estimated due to the contrasting recoveries of the two countries from the COVID-19 pandemic. Japan would remain the world’s third-biggest economy, in dollar terms, until the early 2030s when it would be overtaken by India, pushing Germany down from fourth to fifth.
“Slowing growth has been a consequence of a confluence of factors including fragility in the banking system, adjustment to reforms, and a deceleration of global trade,” it said. “GDP in Q2 (April-June) 2020 was 23.9 percent below its 2019 level, indicating that nearly a quarter of the country’s economic activity was abolished by the drying up of global demand and the collapse of domestic demand that accompanied the series of strict national lockdowns,” it said.
Due to the implementation of restrictions many parts of the economy succeeded to spring back into action except a few. The agricultural sector has been the economy booster and lifeline for India, which has been floating by a bountiful harvest. “The pace of the economic recovery will be inextricably linked to the development of the COVID-19 pandemic, both domestically and internationally,” it said. India is the manufacturer of the majority of the world’s vaccines with a 42-year-old vaccination program that aims of providing vaccines to 55 million people each year. “In the medium to long term, reforms such as the 2016 demonetization and more recently the controversial efforts to liberalize the agricultural sector can deliver economic benefits,” the think tank said. However, with the majority of the Indian workforce employed in the agricultural sector, the reform process requires a delicate and gradual approach that balances the need for longer-term efficiency gains with the need to support incomes in the short-term. Although the debt to GDP ratio did rise to 89 percent in 2020. “The infrastructure bottlenecks that exist in India mean that investment in this area has the potential to unlock significant productivity gains. Therefore, the outlook for the economy going forwards will be closely related to the government’s approach to infrastructure spending,” it added.
The CEBR report said India will have to boost spending on infrastructure in the future. “The infrastructure bottlenecks that exist in India mean that investment in this area has the potential to unlock significant productivity gains. Therefore, the outlook for the economy going forwards will be closely related to the government’s approach to infrastructure spending.”