India To Become $10 Trillion Economy by 2026

[Nilgiri]

That all assumes India can gain and maintain a high GDP growth rate, which I don't believe it can. It will not get double digits, in fact I believe that it probably won't achieve 9% growth that many keep saying it will, and there is little reason to believe otherwise.


Just words without any sort of backing.

India's economy is 2-ish trillion dollars, not 5-6 trillion.

You're also presenting the best case scenario, and economies don't work like that. I calling it right now, India won't be able to maintain a stable high growth rate, it simply can't, even with reforms.

What I'm saying is it doesnt need double digit real growth rate (thats what is reported these days as the "growth rate") to get an annualized total growth rate of 16% (in nominal US dollars) if its inflation control is improved even more and less depreciation happens w.r.t USD and preferably reverses. This can happen even with less than 9% real growth annually.

Like say 8% real growth + 4% inflation + 4% appreciation.

It's really PPP that matters more to me in the end anyway since that actually represents an estimate of actual end "physical" consumption per person. Both price level w.r.t the USD and inflation are taken into account in PPP automatically (in theory) so its a superior estimate compared to nominal for per capita purposes.

 

[That Guy]

What I'm saying is it doesnt need double digit real growth rate (thats what is reported these days as the "growth rate") to get an annualized total growth rate of 16% (in nominal US dollars) if its inflation control is improved even more and less depreciation happens w.r.t USD and preferably reverses. This can happen even with less than 9% real growth annually.

Fair enough, but color me skeptical.

 

[kaykay]

Not sure about 10 trillion USD figure but we'll be close....IMO more like 7-8 trillion USD.
PS: According to IMF, we'll exceed 3 trillion figure by 2019 so my opinion is based on that.

 

[temporary12345]

$10 Trillion economy

Thanks for the correction.

Firstly, Devaluation of currency is not the reason for growth rate slowdown. Infact the devaluation helps in export, if you want to see the example see China, how they are driving their exports by constant devaluation of currency.

Secondly the currency devaluation is scientific and not arbitrary, its monitored closely by RBI and not happen automatically, RBI intervenes if they find currency is devalued more than the limit. There is set of variable that decides the currency exchange rate. Our currency even at the rate of 66 is overvalued. It will attain the optimum level at around 70 and its all scientific and done with keeping the other currencies in mind.


And no we are not going to be $10 Trillion economy in 10 years, at max $6 Trillion however in next 16 years we can be $10 Trillion economy.

NO.. NO...NO....

You took it the wrong way.

I calculated using compound interest formula that India needs to grow at 15.34% Nominal to become $10 Trillion economy by 2026. This formula gives nominal growth rate, not real growth rate.

Now the growth rate you come across like "India is growing at 7.8%" are not nominal growth rate. They are real growth rates. Nominal growth rate is summation of Real growth rate with inflation after factoring in currency fluctuations and monetary policy.

Now if currency is devalued, Real GDP may grow due to increase in exports ,but nominal GDP that is paper GDP in dollar term decreases. It is due to the fact that most of GDP of any country is generated in its own currency, and if value of currency of that country degrades ,its GDP in dollar term goes down.

Now in India, inflation usually is around 6% on long terms (even on lower side), so with 6% inflation, we would need to grow at around 9% real to become $10 Trillion economy by 2026, BUT only if our currency does not lose value repeatedly like it did in UPA-II.

Doubt it, there is little reason to believe that India can achieve $10 trillion by 2026, even by 2036. I'd say that India will reach $10 trillion sometime between 2045-55, not before and not after.

You must be very weak in Economics and Mathematics to not recognize absurdity of your claim.

Considering stable currency (currencies rarely undergo wide range of fluctuations anyway), for India to become a $10 Trillion economy by .......... India needs to grow at:

2026: Nominal GDP growth rate: 15.34% ; Real GDP growth rate: 9-10% (depending on inflation).

2036: Nominal GDP growth rate: 7.4%; Real GDP growth rate: 0-2% (depending on inflation).

2046: Nominal GDP growth rate: 4.87%; Real GDP growth rate: -4 to -2% (depending on inflation).

Now real GDP growth rate of India this year is 7.8%. Even a half blind person could see which year is more accurate.

 

[Nilgiri]

Fair enough, but color me skeptical.

Between 2002 and 2007, India annualized around 18.8% total growth in nominal USD terms hitting as high as 30% total growth in 2006 - 2007 due to policies put in place from around 1998 to 2004.

http://www.imf.org/external/pubs/ft...sort=country&ds=.&br=1&c=534&s=NGDPD&grp=0&a=

This was left to atrophy by both UPA administrations which focused more on sharing the cake (strictly economically unsound populist measures since transfer efficiency is notably bad with India's bureaucracy) rather than continuing to grow it at the same pace.

So we are currently in recovery mode with the new administration again to set up the "golden period" type of total growth rate mentioned earlier. We've been there before, we can be there again....especially since we have learned and developed socially even more....and this administration seems to be even more results driven than the one in the early 2000's (and they are backed up by better leadership, technocracy + meritocracy and a very stable lower house).

 

[temporary12345]

to reach that value India needs to double it economy 2.5 times over
meaning at rate of 10%, it will achieve that some where in 15-20 years
meaning 2037 if it grows at 6-7%+3-4 inflation with no devaluation

no wonder china grew for massive rate for 25 years to get near 9 trillion

so under massive reforms and continuous growth indai can acheive that in 20-30 years

but to achieve it in 10 years would mean a growth of 20+ which is simply not achievable unless alot of inflation happens which i am not seeing , i don't think if that happens it will besustainablel

1. Chinese GDP ,25 years ago, was only $392 Billion. They grew nearly 26 times in 25 years. Indian economy today is around $2.4 Trillion and to reach $10 Trillion, it only needs to grow around by 4 times. With Chinese growth rate (rate during their expansion, not today), India would actually become around $18 Trillion economy by 2026, conservatively. I know India would not become that large because as it would grow, its growth rate would naturally slow down, but until it reaches double digit GDP in trillions, it is bound to accelerate at around 10% growth rate. after which growth would depend upon whether India could transform its economy from "serving western companies" to "building its own brands and increase local consumption" or not. If it could not transform, it would remain struck in "middle income trap" ,something similar to what China is facing. If it does, it would grow at this high rate until its per-capita income become similar to western per-capita incomes.

2. India only need to grow at 15% nominal to become $10 trillion economy by 2026 ie around 8-9% real, something which is quite sustainable.

 

[dray]

Government can be anybody but reforms and policies should b continue

True, but it depends upon the vision, willingness and ability of the government to continue the reforms and policies. If you see, Congress's PVN Rao government started the 1st phase of reforms, then there were two successive coalition governments that were only focused on their survival. Then there was Vajpayeeji's government that restarted the 2nd phase of reforms, but after him Manmohan Singh's government failed to continue with the reforms process, now Modi government is restarting it again. If this government goes, then either Rahul Gandhi will become the PM who has no vision and not even willingness to be in politics, he is probably fulfilling his mother's dreams by being in politics (my opinion), or Congress will find someone else, maybe a technocrat as a PM (less chance), in both the cases Sonia Gandhi will remain the shadow driver of the government and we already know that she is not focused on reforms, she is more into 'doles' politics to secure power. AND if by any chance a coalition/third front government comes to power with god-knows-whom-or-how-many as the PM, then you can completely forget about reforms and policies, they will be busy fighting like street dogs . And that's why I am a pro BJP at this moment, I am seeing no other credible alternatives at least for now, I am not trusting Congress with either of the two Gandhis in charge of it.

 

[illusion8]

Numbers shouldn't matter in the face of social development and general upliftment. There is still a long way to go yet.

India is turning into a welfare state and that is great.

 

[temporary12345]

Numbers shouldn't matter in the face of social development and general upliftment. There is still a long way to go yet.

India is turning into a welfare state and that is great.

So you want to replace your daddy with state?

 

[dray]

Guys...let's see some hard figures.

1. During 2004-2014 China's nominal GDP has grown by 5 times (5.33 times exactly) with an average annual growth rate of a little less than 10%.

2. During 2000-2010 India's nominal GDP has grown by close to 4 times (3.62 times exactly) with an average annual growth rate of just 7.22%.

India's GDP:

Year 2000 : $474,692,000,000
Year 2005 : $834,215,000,000
Year 2010 : $1,710,910,000,000

We are already more than $2 trillion economy, an average annual growth rate of 7.5% or so can make us a $10 trillion economy in next 10 years. And that's very much possible if things remain on track, considering that our rupee has heavily depreciated from it's 2006-07 level, and it is going to appreciate eventually with a stronger economy.

Just keep in mind the difference between real and nominal growth rate.

@fsayed @temporary12345 @HypocriteHunter @baba1998 @itachii @litefire @randomradio @Nilgiri @kaykay @Kal Muah

 

[Nilgiri]

Guys...let's see some hard figures.

1. During 2004-2014 China's nominal GDP has grown by 5 times (5.33 times exactly) with an average annual growth rate of a little less than 10%.

2. During 2000-2010 India's nominal GDP has grown by close to 4 times (3.62 times exactly) with an average annual growth rate of just 7.22%.

India's GDP:

Year 2000 : $474,692,000,000
Year 2005 : $834,215,000,000
Year 2010 : $1,710,910,000,000

We are already more than $2 trillion economy, an average annual growth rate of 7.5% or so can make us a $10 trillion economy in next 10 years. And that's very much possible if things remain on track.

Just keep in mind the difference between real and nominal growth rate.

@fsayed @temporary12345 @HypocriteHunter @baba1998 @itachii @litefire @randomradio @Nilgiri @kaykay @Kal Muah

Yah I addressed in posts 35 and 40 in this thread.

 

[Kal Muah]

Guys...let's see some hard figures.

1. During 2004-2014 China's nominal GDP has grown by 5 times (5.33 times exactly) with an average annual growth rate of a little less than 10%.

2. During 2000-2010 India's nominal GDP has grown by close to 4 times (3.62 times exactly) with an average annual growth rate of just 7.22%.

India's GDP:

Year 2000 : $474,692,000,000
Year 2005 : $834,215,000,000
Year 2010 : $1,710,910,000,000

We are already more than $2 trillion economy, an average annual growth rate of 7.5% or so can make us a $10 trillion economy in next 10 years. And that's very much possible if things remain on track.

Just keep in mind the difference between real and nominal growth rate.

Exactly, although GOI needs a lot of support from RBI to do that. I would like to add some other points too :
1. Inflation needs to be checked, else higher interest rates will lead to less investment, resulting in less supply, more inflation, less GDP.
2. Whole TAX system needs to revamp. I appreciate how GOI putting high TAX rates on everything. Once VAT become national, increase VAT and relax the TAX Slab to 5 lacs.
3. More and more demand for swadeshi products. Patanjali is doing a masterpiece in here.

 

[dray]

For a projection of 10 trillion in 2026, the annualised growth rate comes to about 16%.

Lets look at the current growth rates more closely. A 9.5% total current growth rate between 2015 - 2016 can be composed roughly as follows: 8% real growth + 6% inflation - 4.5% depreciation = 9.5%.

Like say 8% real growth + 4% inflation + 4% appreciation.

Considering that our rupee has heavily depreciated from it's 2006-07 level (from Rs.39 to Rs.67 a dollar approx!!), and it is going to appreciate eventually with a stronger economy.

So, we are likely to see an average of:
7.5% real growth + 5.5% inflation + 2% appreciation = 15 nominal growth
to
7.5% real growth + 5.5% inflation + 4% appreciation = 17 nominal growth

That will make us a little less or more than $10 trillion economy in 10 years, we need roughly 16% of average nominal growth to reach that level.

 

[Nilgiri]

Inflation needs to be checked, else higher interest rates will lead to less investment, resulting in less supply, more inflation, less GDP.

Yup very crucial. People always ask me why not just keep inflation since it adds to the total growth.....not realising it is the single biggest factor that prompts currency depreciation (which subtracts from total growth). In fact inflation is really the negative shadow of the rupee that falls on world forex market.

Mismatch between money supply and demand is only really effectively controlled by ensuring the demand is always robust....depressing the demand side of money through increasing interest rates is quite a bad thing and is always a last resort because it has spill over effects. Interest rates should always reflect purely the ideal balance of long term savings rate for the economy and nothing else.

 

[liall]

Considering that our rupee has heavily depreciated from it's 2006-07 level (from Rs.39 to Rs.67 a dollar approx!!), and it is going to appreciate eventually with a stronger economy.

So, we are likely to see an average of:
7.5% real growth + 5.5% inflation + 2% appreciation = 15 nominal growth
to
7.5% real growth + 5.5% inflation + 4% appreciation = 17 nominal growth

That will make us a little less or more than $10 trillion economy in 10 years, we need roughly 16% of average nominal growth to reach that level.

I do not think we are going to see any currency appreciation soon. RBI keeps on buying dollars to increase its chest increasing demand for dollar arresting any significant appreciation in Rupee.