India set to be third-largest economy by FY28: SBI Research

New Delhi: India will become the third largest economy by FY28, two years earlier than projected, said SBI Research economists in a note on Thursday.

"The Indian economy continues to enjoy a period of sustained goldilocks," SBI Research economists said, pointing out that India will surpass Japan and Germany at the current growth rate and account for a 4% share of global GDP.

SBI economists said India will likely grow 8.1% in the first quarter of FY24, pushing the overall growth rate to 6.5%. India recorded a 13.5% growth in the first quarter of FY23. The forecast aligns with RBI projections of 6.5% growth in FY24 but is more optimistic than the International Monetary Fund's revised forecast of 6.1%. Earlier this week, the IMF revised its growth forecast upwards by 0.2 percentage points on the back of strong domestic investment.

PM Narendra Modi on Wednesday remarked that the country will become the third largest economy during his third time in office. The general elections are due in 2024.

SBI economists said that India needs to log 11-11.5% nominal growth annually to achieve this goal, which is achievable with 6.5-7% growth. "We believe that in a world that is ravaged by uncertainties, 6.5-7% growth is the new normal," they said.

The researchers said that the current estimates may undergo an upward revision with the right policy perspective and realignment in global geopolitics.

According to SBI projections, India will also cross the $5 trillion mark as it becomes the third-largest economy in the world.

"In coming days, as macroeconomic prospects steadily improve, India will dynamically seek fuller expression of its full potential and a transformative change in its global position," they noted.

Terming Uttar Pradesh as the land of the midnight sun, the SBI economists projected Uttar Pradesh and Maharashtra to cross the $500 billion mark each by FY28, accounting for nearly a fourth of India's total GDP.