India to become 3rd largest economy within next few years: CII President Sanjiv Puri

Business Sunday 16/June/2024 13:16 PM
India to become 3rd largest economy within next few years: CII President Sanjiv Puri

New Delhi: As Prime Minister Narendra Modi takes charge for the third consecutive term, industry chambers believe that India is poised to become the world's third-largest economy in the next few years.

Newly elected President of the Confederation of Indian Industry (CII) and Managing Director of ITC, Sanjiv Puri, stated that within a few years, India will undoubtedly be among the world's top three economies.

In an exclusive interview with ANI, Sanjiv Puri said, "CII has projected the country's GDP growth at 8 per cent for this year. Several positive factors are contributing to this outlook. Firstly, a better-than-expected monsoon could lead to improved agricultural output, which would help moderate food inflation, currently a bit tricky. Additionally, global trade, which was in negative territory last year, is expected to grow by more than 2 per cent this year. These near-term positive factors could propel the economy to an 8 per cent growth rate instead of the anticipated 7 per cent."

There are numerous opportunities for integration into the global value chain. Free Trade Agreements (FTAs) will facilitate this integration. The manufacturing systems, especially in electronics, are progressing positively.

A February report by global brokerage house Jefferies predicts that over the next four years, India's GDP will reach USD 5 trillion, making it the third-largest economy by 2027, overtaking Japan and Germany.

This projection is based on India being the fastest-growing large economy, supported by favourable demographics (consistent labour supply), improving institutional strength, and enhanced governance.

Currently, India is the 5th largest economy with an estimated GDP of USD 3.7 trillion for FY24, despite the pandemic and the macroeconomic imbalances and financial sector issues inherited in previous years, according to the Finance Ministry's January 2024 economic review.

Discussing the capital market, Puri highlighted India's potential, noting that good policies, a progressing economy, and thriving businesses will attract both domestic and international funds to the Indian stock market.

The fundamentals of the Indian economy are strong, offering future potential and several global developments ahead. Key global trends include supply chain diversification, digital and energy transformation, and demographic changes, which are opening up opportunities for Global Capability Centers (GCCs) in India, where about 40 per cent of GCCs are already based.

However, there are risks as well. Geopolitical tensions are disrupting global supply chains. Prolonged high interest rates could risk economic growth. Climate emergencies disrupt supply chains, negatively impacting agricultural production and causing high inflation.

These issues have significant consequences. To address extreme weather, CII has suggested forming a National Commission of Adaptation, as the atmosphere will continue to get hotter, leading to frequent extreme weather events. India will need to scale up its efforts to deal with these challenges effectively.