India's Path To Third-Largest Economy Will Be Driven By Investments, Says Sanjeev Sanyal
To sustain high growth rates over the next 25 years, growth momentum will be generated by investment, Sanyal said.
India is set to become the world's third-largest economy in the next 24 months, driven more by investments than consumption, said Sanjeev Sanyal, member of the Economic Advisory Council to the Prime Minister of India.
"The driving force of our economy has been investment in recent years—government investment as well as increasingly private investment," Sanyal told NDTV Profit on the sidelines of the India Global Forum held in Mumbai on Wednesday.
To sustain high growth rates over the next 25 years, growth momentum will be generated by investment, he said. "Periods of high growth have always been driven by investments, not just consumption."
At 8.4%, economic growth during the quarter ended December surpassed estimates. That was also the highest in the last six three-month periods. As a result, GDP growth for the year ending March 2024 has been revised upwards to 7.6%.
"Growth figures above expectation show that the momentum in the economy is strong even in a difficult environment externally.. we have managed to generate this growth without causing macroeconomic stresses," said Sanyal. "I would argue that our sovereign ratings are two notches below what it should be."
The gross value added or GVA, growth stood at 6.5% during the third quarter. The GDP-GVA divergence was mainly on account of net indirect taxes. Sanyal said the divergence wasn't something to be worried about.
"The government's focus is on having a sustained level of growth," he said. "I don't see the gap (between GDP and GVA) being a deep concern."
In January, the Finance Ministry, in its economic review, said India's expected to become the third-largest economy in the world with a GDP of $5 trillion in the next three years and touch $7 trillion by 2030 on the back of continued reforms.
India’s contribution to global real GDP growth should reach 7.7% by 2028, Jefferies said in a note last month, while also projecting its equity markets to reach a market capitalisation of nearly $10 trillion by 2030.
"India's GDP is likely to touch $5 trillion over the next four years and will overtake Japan and Germany to become the third largest economy by 2027," the brokerage had said in a note.
