India set to surpass Japan and Germany to become world's third-largest economy by 2027: Jefferies

India is poised to become the world's third-largest economy by 2027, reaching a GDP of $5 trillion, according to global brokerage firm Jefferies. This projection is attributed to India's consistent GDP growth rate, supportive geopolitical environment, continous market capitalization, ongoing reforms, and robust corporate culture.

India Economic Growth

Mahesh Nandurkar, an India Equity analyst at Jefferies, noted that over the past decade, India's GDP has demonstrated a Compound Annual Growth Rate (CAGR) of 7% in USD terms, soaring from the eighth to the fifth-largest economy globally. It is projected that India's GDP will surpass $5 trillion in the next four years, surpassing economies like Japan and Germany, fueled by factors such as demographic advantages, institutional strengthening, and governance improvements, reported Money Control.

India has maintained a growth rate of 10-12% in USD terms over the past two decades, positioning itself as the fifth-largest equity market globally. Jefferies predicts that India's market capitalization will likely reach $10 trillion by 2030.

Nandurkar emphasized that continuous reforms will uphold India's status as the fastest-growing large economy. Key reforms such as the implementation of Goods and Services Tax (GST) in 2017, bankruptcy reforms, and the Real Estate Regulation Act (RERA) have streamlined taxation, cleaned up corporate and banking sectors, and revitalized the housing sector.

Moreover, India's surge in market capitalization, currently the fifth-largest globally at $4.5 trillion, is expected to attract more global investors as market free float rises. The country's supportive geopolitical environment, vibrant democracy, and consistent growth policies have positioned it as a key beneficiary in the global economic landscape, attracting investments and fostering entrepreneurship.

India's status as a services export hub, with exports accounting for nearly $450 billion annually, underscores its role in the global economy. Furthermore, its strong corporate culture, focused on Return on Equity (RoE), institutional frameworks, and sustainable investment habits, provide stability and attractiveness to investors, reducing market volatility.

Overall, India's trajectory towards becoming the third-largest economy reflects its resilience, favorable business environment, and strategic reforms, making it a significant player in the global economic arena.

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