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Jefferies predicts India’s rise to 3rd largest economy, $ 5 trillion GDP by 2027

03:53 AM Feb 24, 2024 IST | MUKEET AKMALI
jefferies predicts india’s rise to 3rd largest economy    5 trillion gdp by 2027

Srinagar, Feb 23: A new in-depth report from Jefferies predicts India is poised for massive economic growth over the next several years. The analysis forecasts India’s GDP hitting $5 trillion by 2027 - making it the 3rd largest economy globally, surpassing the likes of Japan and Germany. In the process, India would maintain its status as the world’s fastest-expanding major economy for a second straight decade.


Driving this robust growth is a slate of structural reforms implemented over the last 10 years.


Landmark changes such as GST, streamlined bankruptcy protocols and relaxed FDI rules have removed constraints and boosted investor confidence.

Global investment advisory firm Jefferies has projected an optimistic outlook for the Indian economy and its equity markets.


Jefferies sees India realistically achieving 6 to 7 percent annual GDP growth over the next 5 years.


The report was also bullish on the outlook for Indian equities - expecting annual returns of 18 percent over the next 3 years, outpacing most global peers.


By 2030, the total market capitalisation of Indian stocks could reach $10 trillion.


Jefferies pointed out India’s equity market growth still has room to run, with only 4.7 percent of household savings currently invested in stocks.

However, increased digital access is changing the investor landscape - giving retail participants unprecedented exposure and helping democratise the market.

The popularity of systematic investment plans (SIPs) also signals more disciplined investing habits taking root among the Indian public.

As the economy expands, more domestic savings are expected to flow into the capital markets.

The Jefferies report says, “With growing awareness around investment through mutual funds, we expect much more savings flowing into India's equity markets.”

If India can sustain reform momentum, realise demographic dividends, and achieve the projected $5 trillion GDP milestone - it would cement the country’s position as a rising global powerhouse over the coming decade.

At a Global Business Summit hosted by a private TV network in Delhi, Prime Minister Narendra Modi last week expressed confidence that India was poised to become the world’s third-largest economy in the coming years.

He boldly stated that this feat would be accomplished during his third term as Prime Minister, calling it “Modi’s Guarantee”.

PM Modi noted that India was already expanding rapidly and had no doubt that it would surpass other countries to assume the No 3 spot globally in economic size.

He reiterated that this milestone would occur before the end of his next term, were he to be re-elected.

India currently boasts the fifth-largest economy by purchasing power parity.

It is also the fastest-growing major economy in the world.

Based on these strengths, PM Modi strongly believes India would continue its ascension in the global economic ranks during his next administration.

Union Minister of Home and Cooperation Amit Shah Sunday said that there was a need to carry the message to every household that when Narendra Modi is elected for the third time, the nation would rise to the third rank among economies.

The report credits sustained reforms undertaken by the government for creating an ecosystem for high growth.

“Since 2014, the Modi government has successfully delivered on a set of reforms to boost ‘Ease of Doing Business’ in the country. The landmark GST reform of 2017 compressed a multitude of taxation structures into a common national system, akin to creating a ‘Eurozone’ style flow of goods and services across the Indian states. The Bankruptcy Law of 2016 proved crucial in accelerating the cleanup of bad loans from the banking system. The Real Estate Regulatory Act (RERA) of 2017 helped to clean up the vast, unorganised property sector,” the report says.

The Jefferies report says, “In a world of rising geo-political tensions, India has deftly managed to remain on good terms with the G7 while also being a fully signed up member of BRICS, as reflected in the widely acknowledged success of the G20 Summit held in Delhi last September.”