Narendra Modi has rightly said that he will ensure that India joins the league of three largest economies of the world during his third terms as the Prime Minister. It was early this year that India made it to the top five economies rank, pipping England. We expect a searing GDP growth to propel it from today’s $3.4 trillion to go beyond Japan’s by 2027, hitting $29 trillion by 2047 and $45 trillion by 2052. A temporary slowdown till September 2024 is possible, but we view a cyclical recovery as likely in 2025. Its demographic advantage, financial deepening and a stable currency with ample forex reserves fuel our longer-term outlook. Analysts prefer large-cap liquid stocks to maximise capital protection and mid-caps for growth opportunities. The elevation to the third-largest economy group is a certainty, as top economists have been opining, time and again. The country has surpassed several economies in the past 15 years and this remarkable upward trend is expected to continue into the future, largely because of renewed government policies. By 2027, it will factor in dollar-yen normalization against a six per cent real GDP potential/trend growth rate, 5.5 per cent inflation rate, and 2.5 per cent depreciation. If reforms scale growth up to eight per cent, India can actually overtake the US over the next 30 years.
They will be the three growth drivers that can help India realise the dream of joining the world’s three economies club by 2027. Demographic dividend, financial deepening and forex stockpile will likely boost economic growth. A large pool of cheap labour reduces production costs and mobilises higher savings for investment. Deepening of financial services makes for more efficient allocation of resources. A forex reserves buffer protects the rupee and provides external stability, boosting investor confidence. Alternate energy could cut down the current account deficit going ahead. There are also other challenges that may act as deterrents to India’s 2027 aspirations. There are some critical factors that need to be taken into account when assessing the country’s growth prospects. According to an analysis, the two deficits do not pose a significant threat to its growth trajectory. Additionally, experts’ growth projections do not account for any potential efficiency improvements from reforms.
However, there is a consensus among politicians about the necessity to implement economic reforms. This also includes Axis Bank, Bharti Airtel, Hindustan Unilever, ICICI Bank, Mahindra & Mahindra, NTPC, Sun Pharma, UltraTech, TCS and SBI. All of analysts’ picks have proven track-records of delivering consistent returns. Experts also highlight mid-cap stocks Zomato, PVR Inox, Delhivery, Prestige and Paytm as offering long-term value. India is poised for growth with rising incomes, institutional accessibility and the impact of innovation and digitisation. Analysts have recommended large-cap liquid stocks and 10 picks as potential market growth drivers.
