India’s Economy $7-9 Trillion is now a realistic target as the nation heads towards 2030, according to Arvind Panagariya, Chairman of the 16th Finance Commission. Speaking at the India Economic Conclave hosted by Times Network, Panagariya projected that India’s GDP could exceed USD 7 trillion under conservative growth estimates and could potentially touch USD 9 trillion with aggressive reforms and sustained economic momentum.
Growth Potential Backed By Reforms
Highlighting India’s growth trajectory, Panagariya emphasized that the country’s economic framework has many of the essential components already in place. He stated, “Conservative estimates put the economy at USD 7 trillion by 2030. With aggressive reforms and policies, it’s entirely possible to hit USD 9 trillion.”
Reforms, he said, are critical to achieving these targets. Panagariya outlined that strategic changes could propel India’s growth rates to 11-12% in current dollar terms, surpassing the 10% benchmark and driving the economy to nearly USD 10 trillion by the early 2030s.
Addressing Structural Challenges
Panagariya also drew attention to structural challenges hindering India’s economic growth, particularly the prohibitive cost of urban real estate. “Urban land in India is extremely expensive, making it nearly impossible to develop sustainable commercial rental housing. Rental leases in cities offer returns of just 2-3%, while interest rates hover around 8%. This mismatch makes commercial projects unviable,” he noted.
By addressing these structural barriers, especially in urban real estate, India could unlock further economic potential. Panagariya suggested that reducing land costs and revising rental policies could significantly boost urban development and housing projects.
Investment Strategies For Long-Term Growth
In addition to outlining India’s macroeconomic outlook, Panagariya also provided insights into strategic investment avenues. Recommending equities as the top choice for long-term gains, he stated, “Equities consistently outperform other asset classes like gold or real estate over a 10-year period. You don’t need to frequently shift portfolios; even a random investment approach in equities can yield better returns.”
While encouraging investments in equities, he advised caution with real estate investments, which depend heavily on factors like location and urban development. “Real estate is market-specific. Urban, rural, and semi-urban areas each offer different returns, and careful market study is essential,” he explained.
The Roadmap To $9 Trillion
India’s journey to USD 9 trillion involves tackling key issues and seizing growth opportunities:
- Pending Reforms: Implementing reforms in taxation, labor, and land acquisition to streamline economic activity.
- Urban Development: Addressing urban real estate costs and encouraging affordable housing projects.
- Sectoral Focus: Boosting high-growth sectors like technology, manufacturing, and infrastructure.
- Global Integration: Strengthening trade relations and reducing dependency on imports to ensure a resilient economy.
Panagariya’s optimistic outlook reflects confidence in India’s ability to sustain its economic momentum. With policy reforms, investments in infrastructure, and strategic growth initiatives, India is well-positioned to become a major global economic powerhouse by 2030.
Equities As The Preferred Asset Class
Panagariya’s advice to investors to focus on equities underscores the robust potential of India’s stock market. By staying invested in equities over the long term, individuals and institutions can benefit from compounding returns and market growth.
The Chairman also warned against over-reliance on gold and real estate, citing their lower historical returns compared to equities. “Real estate requires thorough research, while gold lacks the growth potential of equities. For consistent and high returns, equities remain unmatched,” he said.
The Path Ahead For India
India’s economic ambitions are within reach, provided the nation continues to focus on critical reforms and addresses structural bottlenecks. As the world’s fifth-largest economy, India’s trajectory towards USD 7-9 trillion reflects its potential to reshape the global economic landscape.
With strategic planning and execution, India’s economy is not only expected to grow but to thrive, positioning itself as a formidable player in the global market by the end of the decade.