On 26th of August 2007, TOI announced that India has crossed the GDP size of USD 1 Trillion.  From being a USD 500 bn economy in 2000-01, it took merely 6 years to double in size. It was a big feat and reasons to celebrate.

Since independence, India took 54 years to reach the first USD 500 bn, and then just 6 years to add the next USD 500 bn. Somewhere in 2014, it took just 7 years to add the next trillion when India surpassed the USD 2 Trillion mark. These numbers may look astonishing to many but not for those, who understands the effect of compounding in the long term. With 12% p.a. NOMINAL GDP (Real GDP rate + Inflation) growth rate, economies like India would double up every 6 years. Sometimes, Real GDP contributes more, and other times it is inflation. Not to undermine that currency fluctuations also play a major role.

It’s been 5 years since then, and India stands at USD 2.89 Trillion. India’s growth engine is running slow, otherwise we would had already crossed  USD 3 Trillion mark. As soon as India  comes back to its normal pattern of growth, India should become a USD 5 Trillion economy by 2023-2024, a USD 10 Trillion by 2030, and so on. All this is possible for next 20 -30 years, as India has high potential for growth (https://seekingalpha.com/article/4180843-s-curve-signalling-major-bull-market-commodities-and-india), unless our politicians play havoc with it.

My view is that unless we are going into a prolonged recession, USD 5 Trillion economy over next 4-5 years is inevitable. It will be a gross underachievement if we miss it. Imagine how crucial next 5 years are from investment perspective. If economy becomes nearly double, so will be the stock markets and may be property prices with a lag. We only need common sense economics from the politicians, and common sense investments from investors. Rest shall be taken care of by Indian economic juggernaut !!


By Sameer Rastogi

18 years of experience, PG in Finance and has delivered Wealth Management lectures at IIM Lucknow, IBS Gurgaon and IIPM Delhi. Contributed to various newspapers. Strength – Application of Economic fundamentals to Investment

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