India’s economy needs to grow at a sustained pace of around 8% annually over the next decade to achieve the government’s vision of becoming a developed economy by 2047, the Finance Ministry has told lawmakers.
In a report shared with a parliamentary committee, the ministry highlighted that while India’s GDP growth is projected at 6.3%–6.8% for FY25, this remains short of the 9.2% growth clocked in 2023-24 and below the levels required to meet long-term goals.
“Ideally, the Indian economy will need to grow by around 8% in real terms every year, at least for a decade,” the ministry said.
Investment Push Needed
To support this trajectory, India must raise its investment rate to about 35% of GDP, compared to the current 31%. The government is banking on domestic demand, infrastructure spending, and private investments to drive momentum.
Geopolitical and Trade Pressures
The outlook comes amid rising global uncertainties, including new U.S. tariffs. A 50% tariff on Indian goods could trim India’s GDP growth by as much as 40 basis points in FY26, the ministry warned.
These remarks were made before the U.S. further imposed a 25% tariff on Indian products and another 25% tariff linked to Russian oil imports.
Trade negotiations between India and the U.S. stalled earlier this month after New Delhi resisted opening its agriculture and dairy markets.
Policy Measures
To offset external headwinds, India is focusing on:
- Boosting domestic demand via consumer tax cuts.
- Encouraging labour-intensive exports like textiles, apparel, and leather.
- Supporting growth with a 100 basis point rate cut by the central bank earlier this year.
Economists say sustaining growth at 8%–9% annually is essential if India wants to reach developed economy status by its centenary of independence in 2047.