India's economy could reach $5.1 trillion by FY29, according to an analysis by OmniScience Capital. The projection is based on stronger real growth, healthier bank balance sheets, and a revival in corporate capital expenditure supporting the country's expansion. An optimistic scenario projects India's GDP reaching $5.9 trillion by FY29, with nominal GDP growth potentially reaching 8% in the base case and 9% in an optimistic scenario in US dollar terms. The analysis assumes 6.5% real GDP growth, 4% inflation, and 2.5% rupee depreciation annually in the base case scenario.
Actual GDP reached $4.1 trillion in FY26, implying a nominal dollar CAGR of 5.4% from FY19. This figure rose to $4.1 trillion in FY26, taking the CAGR to 5.4%. Despite the delay in achieving the $5 trillion target, real GDP growth averaged 7.4% between FY22 and FY26, compared with 6.2% during the previous two decades. The underlying growth trajectory remains intact despite earlier setbacks.
The $5 trillion ambition, first outlined in FY19, was delayed by the pandemic, stressed bank and corporate balance sheets, and sharp rupee depreciation. However, the report indicates that stronger trade and increased dollar inflows are expected to support the rupee recovery. The firm attributes the shortfall to three key factors: the 4.15% GDP contraction in FY21 during the Covid-19 pandemic, twin balance-sheet stress affecting banks and corporates, and a sharp 12.3% rupee depreciation against the US dollar in FY26 alone. Bank balance sheets are now at their healthiest in 20 years, and corporate balance sheets are positioned for capital expenditure, which the firm describes as a potential inflection point for sustained growth.
Under the optimistic scenario, real GDP growth rises to 7%, inflation remains at 4%, and annual rupee depreciation slows to 2%. The report expects stronger trade and increased dollar inflows to support the rupee recovery. These factors collectively support the projection that India could reach the $5.1 trillion milestone by FY29. Under an even more optimistic scenario of 7% real growth and 2% annual rupee depreciation, the economy could reach the $5.9 trillion milestone by FY29 and $11 trillion by FY35.
