• World Economic Forum president says India's rapid growth in the digital economy positions it favourably on the global stage.
• According to World Bank projections in January, India is anticipated to maintain the fastest growth rate among the world’s largest economies
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India's economy will reach the $10 trillion mark by the end of this decade, World Economic Forum President Borge Brende has predicts.
Speaking to Business Today in an interview with executive director Rahul Kanwal on the sidelines of the 54th annual World Economic Forum in Davos, WEF president Brende expressed confidence in the Indian economy's growth trajectory, emphasizing its potential to join the ranks of the world's largest economies.
"We think, in the coming decade, we can be speaking about a $10 trillion economy, at least in the coming two decades," Brende said, reflecting on India's economic prospects amidst global slowdown and geopolitical tensions.
The WEF president acknowledged India's rapid growth in the digital economy, which is expanding twice as fast as the rest of the economy, positioning the nation favourably on the global stage.
"India has been at the forefront due to the digital economy and the export of services. This is a very sweet spot for India.
"But, of course, reforms should have to continue in India. Reforms related to education, funding and reforms to tackle unnecessary red tape should continue. I feel there is an understanding of all these things in New Delhi," Brende, a former Norwegian Foreign, Trade and Industry minister, added.
Prime Minister Narendra Modi at different events last year vowed to make India the third biggest economy in the world in his third term.
“It is Modi’s guarantee to make our country the third largest economic superpower in the third term,” the PM said while inaugurating several development projects related to the railways, electricity, roads and water supply in December last year.
Modi was reiterating remarks he made in August when he said, "You all know that in the last 10 years, India has risen from 10th economic power to number 5. And now, Modi has given a guarantee to the country that in the third term [as PM], India will certainly be among the top three economies”.
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According to World Bank projections in January, India is anticipated to maintain the fastest growth rate among the world’s largest economies, but its post-pandemic recovery is expected to slow, with estimated growth of 6.3 percent in 2023-24 financial year.
"Growth is then expected to recover gradually, edging up to 6.4 percent in FY2024/25 and 6.5 percent in FY2025/26. Investment is envisaged to decelerate marginally but remain robust, supported by higher public investment and improved corporate balance sheets, including in the banking sector," World Bank Global Economic Prospects report January 2024 says.
The optimism for India's economy is rooted in its significant growth rate, with Brende projecting an eight per cent growth for the current year.
This positive outlook comes despite global trade growth slowing to 0.8 per cent last year from 3.4 per cent.
Brende's confidence in the Indian economy is further supported by its resilience in the face of rising oil prices and the ongoing Israel-Hamas conflict, which pose threats to global supply chains and have implications for oil-importing nations like India.
In his interview with Indian TV channel NDTV, Brende elaborated on India's potential for exponential economic growth, likening it to a "snowball effect." He emphasized that continued reforms, geopolitical peace, and investments in research and development and infrastructure are key to realizing this ambitious economic goal.
The remarks come at a time when India, currently the world's fifth- largest economy with a GDP of approximately $3.7 trillion, seeks faster growth due to its service-oriented economy and the global boom in digital services trade.
Comparatively, Brende said despite slowdowns and geopolitical conflicts dragging down the growth outlook worldwide, there are signs of recovery, and he expects the US to avoid a recession and China to regain momentum in the latter part of the year.
On China, he said the world's second-largest economy will continue to foster new sources of sustainable growth due to its investment in research and development and green energy.
World Bank expects US growth to decelerate to 1.6 percent this year as higher interest rates weaken borrowing and spending, while China’s economy, the world’s second-largest after America's, is expected to grow at 4.5 percent this year and 4.3 percent in 2025, down from 5.2 percent last year.
The WEF chief further discussed the impact of artificial intelligence on employment, suggesting that while AI may replace some jobs in the short term, it ultimately leads to higher productivity and welfare, which can help in eradicating poverty, particularly in economies like India.
He stressed the importance of global collaboration and trust-building, especially in a world facing significant geopolitical competition and challenges such as pandemics, climate change, and cyber-attacks.