India's Golden Decade: The path to a $6 trillion economy

The Indian economy has been growing at an elevated level. The recovery post-COVID has been above most experts' expectations. The measures announced by the government and the central bank in the aftermath of the pandemic have yielded results.

- Akhil Chaturvedi, Chief Business Officer, Motilal Oswal AMC

The economy has bounced back in the green to be among one of the fastest-growing major economies in the world. The steps announced were balanced and planned responsibly, even now when the central banks are unwinding their easy monetary policy it has had minimal impact on the economy and much of the measures were consumption focused. The $3.2 trillion economy is poised to grow strength to strength in FY23 as well as FY24.

As per the Reserve Bank of India's estimate, the real GDP growth is expected to grow at 7% for FY23 and 6.4% for FY24. The growth is expected to be evenly balanced and consistent as the estimate suggests growth for Q1 of FY24 at 7.8%, for Q2 at 6.2%, Q3 at 6%, and Q4 at 5.8%.

It was only recently that the country's GDP grew to become the fifth largest in the world, leaving behind its erstwhile colonizer UK. There are a host of factors that have helped India become the fifth-largest economy. Going forward India is poised to become a $6 trillion economy which will be the third largest behind only China and the US. Let's take a look at the journey till now, factors that will help drive the economy to that position in the next decade, and also the likely impact of that.

The Journey, and the march to $6 trillion

The journey has not been so easy. It has been a growth of epic proportion over the past 7 decades. And as we grew, the next phase of growth only became easier. As shown in the illustration below, the Indian economy took almost 58 years to reach the first trillion, from its independence in the 1950s to 2007. Whereas it took just 7 years to grow from the first to the second trillion. To be sure, India opened up its economy to foreign investment.