In a speech on Wednesday, Prime Minister Narendra Modi made a big announcement that India will become one of the world's top three economies during his "third term in power". While PM Modi pitched this as his guarantee, several global estimates had projected last year that India will become the third-largest economy by the 2027-28 financial year. India's Gross Domestic Product (GDP) has, in fact, been the world's third-largest in terms of purchasing power parity since 2011.
In October 2022, the International Monetary Fund predicted that India could overtake Germany and Japan to become the world's third-largest economy by FY28. India's economy is currently the fifth-largest - behind the US, China, Japan, and Germany.
The organisation estimated that India's economy, which currently stands at around $3.75 trillion, will cross $5 trillion by FY28. The IMF projected that the US economy will remain on top at $31 trillion and make up 24% of the global economy. It will be followed by China's $25.7 trillion and 20% share of the global GDP. India will be third at $5.2 trillion and 4% of the global economy.
Similarly, the State Bank of India had said in July that the country is likely to become the third-largest economy by FY28, moving up seven places from 2014, when it was ranked 10th.
The SBI Ecowrap - a report by the bank's Economic Research Department - said that to achieve third place by FY28, India needs to have a compounded annual growth rate (CAGR) of 8.4% till 2027 (in dollar terms). This translates to 11-11.5% nominal GDP growth per annum (in ₹ terms), which is achievable. India's nominal GDP growth in FY23 was 16%.
In 2011, India became the world's third-largest economy in terms of purchasing power parity (PPP), according to the World Bank. It was the 10th-largest economy in 2005 and moved up seven places in six years. The PPP measure is used to compare economies and income of people by adjusting for differences in prices.
According to IMF figures for 2023, USA has a share of 15.39% of the global GDP in terms of purchasing power parity, followed by China at 18.92% and India at 7.47%.
Even though India is among the top five countries in terms of GDP value, it lags in terms of per-capita income, which is less than the average of lower middle income countries.
India's per-capita income is $2,388, lower than Bangladesh, whose figure is $2,688. The average for lower middle income countries is $2,542.
Listen to the latest songs, only on JioSaavn.comPer-capita income in China is $12,720 and the figure for the United Kingdom is $45,850.
Speaking at the inauguration of Delhi's revamped Pragati Maidan on Wednesday, PM Modi had said, "In our first term, India was in the 10th spot in terms of economy. In my second term, it is the world's fifth-largest economy. On the basis of track record, I will make the country believe, in the third term, India's economy will be among the world's top three. And this is Modi's guarantee".