SBI RESEARCH

ECOWRAP
AT CURRENT RATE, INDIA TO BECOME THE 3RD LARGEST ECONOMY BY
2027 (FY28), 2 YEARS EARLIER THAN OUR PREVIOUS PROJECTION OF Issue No. 19, FY24
2029 (FY30)! UTTAR PRADESH WILL BE INDIAN “LAND OF MIDNIGHT SUN”! Date: 27 Jul 2023

The Indian economy continues to enjoy a period of sustained goldilocks. There is now an increasing consensus that India’s
GDP in Q1FY24 is likely to surpass 8% (SBI projection at 8.1% with an upward bias), thus pushing India’s GDP growth to
beyond 6.5% for FY24. We firmly believe that in a world that is ravaged by uncertainties, 6.5%-7.0% growth is the new
normal.
The path taken by India since 2014 reveals that India is likely to get the tag of the 3rd largest economy in 2027 (or FY28)
based on actual GDP data as on March 2023, a movement of 7 places upwards since 2014 when India was ranked 10th
and 2 years earlier than our previous forecast of 2029. India should surpass both Japan & Germany in 2027 at the current
rate of growth. This is a remarkable achievement by any standards. Interestingly, the incremental increase by India
between 2022-2027, is more than the current size of Australia’s economy at $1.8 trillion! At this rate, India is likely to
add $ 0.75 trillion in every 2 years, implying that India is all set to touch $20 trillion by 2047, at least on current
numbers. India’s global share in GDP will cross 4% by 2027.
Behind this surge, India needs to grow by CAGR of 8.4% till 2027 (in dollar terms). This translates into 11.0-11.5% nominal
GDP growth per annum (in Rs terms), which is eminently achievable with a 6.5-7% growth rate.
State-wise estimate indicates that at least two Indian states, Maharashtra and Uttar Pradesh, will break the $500 billion
mark in 2027 (or FY28) when India achieves the 3rd place in global economy. The GDP size of major Indian states in 2027
will be more than the size of some of the Asian and European countries like Vietnam, Norway and so on.
In coming days as macroeconomic prospects steadily improve, India will dynamically seek fuller expression of its full poten-
tial and a transformative change in its global position. Additionally, the recent visits of the PM mark significant long term
economic gains for India in areas of onshoring of chip manufacturing, defence relationship, climate transition & climate
finance, trade disputes and creation of special economic zones. Development will have a cascading impact on economic
growth in India and extended neighbourhood.

India’s Share in World GDP (%)

• Against all odds India’s GDP growth is expected to grow
4.5%
by more than 8% in Q1 FY24 (8.1-8.2%). With this, India
4.1%
may surpass the 6.5% mark of overall growth in FY24. We 4.0%

firmly believe that in a world that is ravaged by uncertain- 3.7%

ties, 6.5%-7.0% growth is the new normal. 3.5%

3.3%
• Meanwhile, India has undergone a large structural shift 3.0%

since 2014 and is now the 5th largest economy. The

share of India’s GDP is now at 3.5%, as against 2.6% in 2.5%

2014 and is likely to reach 4% in 2027.

2.0%
• The path taken by India since 2014 reveals India is likely
1.6%
to get the tag of the 3rd largest economy in 2027 (or 1.5%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022

2025 P
2023 P
2024 P

2026 P
2027 P
2028 P

FY28), a movement of 7 places upwards since 2014 when

India was ranked 10th. India should surpass both Japan & Source: IMF, SBI Research
Germany in 2027 at the current rate of growth. This is a
remarkable achievement by any standards. Interestingly,
the incremental increase by India between 2022-2027 is
more than the current size of Australia’s economy!

See the last page for disclaimer 1

Ecowrap SBI Research

Top 10 Economies, Nominal GDP ($ Bn)

India’s Transition since 2014
2014 2022 2027 P
Nominal GDP Nominal GDP Nominal GDP Rank Year
Rank Country Share (%) Rank Country Share (%) Rank Country Share (%)
($ bn) ($ bn) ($ bn)
1 US 17551 22.1% 1 US 25464 25.4% 1 US 31092 24.4% 10th 2014
2 China 10524 13.2% 2 China 18100 18.1% 2 China 25722 20.2% 7th 2015
3 Japan 4897 6.2% 3 Japan 4234 4.2% 3 India 5153 4.0%
4 Germany 3890 4.9% 4 Germany 4075 4.1% 4 Japan 5077 4.0% 6th 2019
5 UK 3067 3.9% 5 India 3399 3.4% 5 Germany 4947 3.9%
5th 2022
6 France 2857 3.6% 6 UK 3071 3.1% 6 UK 4016 3.1%
7 Brazil 2456 3.1% 7 France 2784 2.8% 7 France 3322 2.6% 3rd 2027 P
8 Italy 2163 2.7% 8 Russia 2215 2.2% 8 Brazil 2588 2.0%
Source: IMF; SBI Research
9 Russia 2049 2.6% 9 Canada 2140 2.1% 9 Canada 2492 2.0%
10 India 2039 2.6% 10 Italy 2012 2.0% 10 Italy 2407 1.9%
Source: IMF WEO; SBI Res ea rch

Top 15 States contributing to India GDP in FY28

• To achieve the 3rd place India needs to grow by CAGR
Estimated Size Estimated Countries with
of 8.4% till 2027 (in dollar terms). This translates into State
($ Bn) Share (%) equal size in 2027
11.0-11.5% nominal GDP growth per annum (in Rs Maharashtra 647 13% Vietnam
terms), which is achievable. Uttar Pradesh 515 10% Norway
• State-wise estimate indicates that at least two Indian Tamil Nadu 426 8% Chile
states will break the $500 billion mark in 2027 (or Karnataka 395 8%
Colombia
FY28) when India achieves the 3rd place in global Gujarat 386 7%
economy. The GDP size of major Indian states in 2027 Rajasthan 252 5% Qatar
will be more than the size of some of the European Andhra Pradesh 243 5% Ethiopia

countries like Norway, Hungary, etc. Telangana 239 5%

Algeria
Madhya Pradesh 234 5%
• A broad-based growth of empowerment will also lift
Kerala 218 4%
India's per capita income from current levels and this Hungary
Delhi 209 4%
could also act as a force multiplier for a better tomor-
West Bengal 206 4%
row. Kuwait
Haryana 200 4%
• In coming days as macroeconomic prospects steadily
Bihar 159 3% Dominican Republic
improve, India will dynamically seek fuller expression Punjab 151 3% Slovak Republic
of its full potential and a transformative change in its India 5153 - -
global position. Source: WEO,SBI Research,* FY28 is CY27
• At the beginning of 21st century, China embarked on
an accelerated growth path occupying the second
largest economy tag. We believe, with right policy
perspective and realignment in global geopolitics our
current estimates might even undergo an upward
revision!

*****
Ecowrap SBI Research

Disclaimer: The Ecowrap is not a priced publication of Contact Details:

the Bank. The opinion expressed is of Research Team Dr. Soumya Kanti Ghosh
and not necessarily reflect those of the Bank or its Group Chief Economic Adviser
subsidiaries. The contents can be reproduced with State Bank of India, Corporate Centre
proper acknowledgement. The write-up on Economic & M C Road, Nariman Point, Mumbai - 400021
Financial Developments is based on information & data Email: [email protected], [email protected]
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accepted for the accuracy of facts and figures. The Bank : kantisoumya
or the Research Team assumes no liability if any person
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finding in Ecowrap.