Davos 2025: India Needs Bigger Reforms To Become $10 Trillion Economy, Says Gita Gopinath

India continues to be the fastest-growing major economy — despite its recent slowdown — but will need "much bigger" structural reforms to become a $10-trillion developed economy by 2047, according to Gita Gopinath.

Recent moderation in growth trajectory is due to a slowdown in public investments post-elections, the Deputy Managing Director of the International Monetary Fund told NDTV in Davos.

“We expect public investments to bounce back and rural consumption to strengthen. However, to achieve higher, durable growth, India needs to maintain its focus on public infrastructure investments, ensure timelines are met, improve ease of doing business, and integrate more strongly into global supply chains by cutting some taxes,” Gopinath said.

India’s goal of becoming a $10 trillion economy by 2047 is "ambitious", but it's a long way off, while "the world isn’t stationary". "Achieving this will require much bigger structural reforms than what we’ve seen in the last decade,” she emphasised.

The Indian economy is estimated to grow at 6.4%, the slowest pace in four years as per the government's first advance estimates. GDP grew at 5.4% in the second quarter of the ongoing fiscal—the slowest pace in seven quarters, led by slower growth across the industrial sector.

Addressing global growth, Gopinath noted a steady pace of 3.3%, albeit with divergences among major economies. The US economy is strong, while Europe is facing challenges, and China is facing issues of its own, she said. "China needs to address its property sector and boost domestic demand."

Gopinath credited its sustained growth in US to public spending and productivity improvements. “The US economy has been powering along for a few years now." New policies by the new Donald Trump administration need to be assessed, but there’s a significant positive sentiment reflected in stock market performance and capital inflows, she said.

Increasing geopolitical tensions and trade policy globally are critical factors governments worldwide will need to address to ensure balanced growth, she said.