How India Could Become a $30 Trillion Economy by 2048

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• At the Berlin Global Dialogue, Commerce and Industry Minister Piyush Goyal asserted that India will be a $30 trillion economy within 20–25 years, shaping how the country negotiates trade deals.
• Goyal argued that while the US economy is currently eight times larger, the gap will narrow significantly over the next 25 years. 
• His statement underlines India’s growing economic confidence and its aim to negotiate trade agreements from a position of strength, aligned with its long-term growth trajectory. 

Understanding the Size of an Economy

• The size of an economy is measured by its Gross Domestic Product (GDP) — the total market value of all goods and services produced within a country in a year.
• GDP reflects a nation’s economic strength and global influence, much like a scoreboard that tracks overall performance. A larger GDP indicates greater production, spending, and prosperity.
• As of end-2024, the US GDP stood at $29.2 trillion, while India’s GDP in the 2023–24 financial year was $3.9 trillion. 
  • To compare, the US state of California alone had a GDP of $4.1 trillion.
• An easy analogy: GDP is like the total runs scored by a cricket team over a season — the higher the runs (output), the stronger and more successful the team (economy).

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How a Country’s GDP Is Used For Comparison

• Globally, GDP is expressed in US dollar terms to allow easy comparison between countries.
• To calculate this, a nation’s GDP in local currency (rupees, in India’s case) is divided by the rupee–dollar exchange rate.
• The GDP discussed internationally is usually the nominal GDP, which includes the effect of inflation — unlike real GDP, which adjusts for it.
• Projecting future GDP, therefore, depends on two factors:
  • India’s nominal GDP in rupees, and
  • The rupee–dollar exchange rate.
• For example, India’s GDP in 2024 was about Rs 330 trillion. If the exchange rate had remained ₹65 per US dollar (as in 2014), India would have been a $5 trillion economy.
• However, since the rate weakened to ₹84 per dollar, the GDP in dollar terms was only $3.9 trillion.

Assessing the Validity of $30 Trillion Projection

• The Minister’s projection of India becoming a $30 trillion economy in the next 25 years appears realistic, based on past trends.
• Looking back, from 2000 to 2024, India’s nominal GDP grew at a compounded annual growth rate (CAGR) of 11.9%, while the rupee depreciated against the US dollar at a CAGR of 2.7%.
• If India maintains the same growth and currency depreciation rates over the next 25 years, its GDP would surpass $30 trillion by 2048 — around 27 years from now, which aligns closely with Goyal’s prediction.

Why $30 Trillion Target Faces Challenges

• While projecting future growth using past trends seems reasonable, India’s economic momentum has slowed since 2014.
• Over the past 11 years, India’s nominal GDP has grown at a CAGR of 10.3%, lower than the 11.9% average of the previous 25 years.
• Meanwhile, the rupee’s depreciation has slightly accelerated to 3.08%, compared to 2.7% earlier.
• This means slower economic growth combined with faster currency weakening.
• If these recent trends continue, India’s GDP would reach $30 trillion only around 2055, not by 2048, pushing Goyal’s target back by nearly a decade.

The Real Impact of a Slower Growth Rate

• The timeline difference between India reaching a $30 trillion economy by 2048 or 2055 may appear small — just 7 to 8 years — but the financial impact is huge.
• If India continues growing at the pace of the past 25 years, by 2055 its economy would be 75% larger than what it would be if it grew at the slower rate of the past 11 years.
• In short, even a slight dip in growth momentum over time can lead to massive differences in economic size when projected over decades.

India Must Sustain Higher Growth to Realize Its $30 Trillion Vision

• The analysis shows that each decade’s performance matters — even small changes in growth rates can cause huge long-term differences in economic size.
• Although it’s normal for growth to slow as economies mature, India is still relatively small compared to the US and China and cannot afford a slowdown yet.
• To make the $30 trillion goal credible, India must accelerate its growth rate and maintain strong, consistent economic momentum over the coming decades.

Source: IE | BS