2024: India's Breakout Year

BY THE END OF 2024, the Indian economy will cross an important milestone: a GDP of $4 trillion. India’s GDP is currently $3.70 trillion. Nominal GDP is estimated to grow 11 per cent in calendar 2024 (real 6.5 per cent plus 4.5 per cent inflation deflator) to $4.10 trillion.

- MINHAZ MERCHANT

BY THE END OF 2024, the Indian economy will cross an important milestone: a GDP of $4 trillion. India’s GDP is currently $3.70 trillion. Nominal GDP is estimated to grow 11 per cent in calendar 2024 (real 6.5 per cent plus 4.5 per cent inflation deflator) to $4.10 trillion.

That will put India within sight of Germany ($4.2 trillion) and Japan ($4.4 trillion). In 2025, it will pass Germany and in 2026 Japan too, to become the world’s third largest economy

Chris Bradley is a director at McKinsey, Global Institute. He made important points in a recent interview with The Economic Times: “The world in 2050 cannot be prosperous without India participating in it. China will lose 200 million workers to ageing by 2050, but India will gain at least 220 million workers from farm migration. So, there will be a massive shift in the labour pool to the Global South.”

Bradley, however, sounds a word of caution. India’s labour productivity is still not high enough. Upskilling is key to India reaping the full harvest of its demographic dividend which began around 2016 and will last till the mid-2040s. India’s productivity is 40 per cent of China’s and just 12.5 per cent of Japan’s.

The next two decades are therefore crucial. Just as China made full use of its peak demographic dividend between 2000 and 2020 during which its GDP rose 12x from $1.21 trillion to $14.69 trillion, this is India’s opportunity to make the two-decadal big leap forward.