India on the Path to Becoming a Global Economic Powerhouse
By Sanjeev Oak
India is poised to become the world’s third-largest economy by 2028, according to a recent report by Morgan Stanley. If the current growth trajectory continues, the Indian economy is projected to reach a staggering $10.3 trillion by 2035.
In its latest global outlook, Morgan Stanley highlights India’s robust domestic market and rapidly improving infrastructure as critical drivers of its ascent in the global economic hierarchy. The report notes that India’s GDP stood at $3.5 trillion in 2023 and is expected to reach $4.7 trillion by 2026 — positioning it behind only the U.S., China, and Germany. By 2028, India is forecast to surpass Germany, with a GDP of $5.7 trillion.
This marks a dramatic transformation from 1990, when India ranked 12th globally in terms of GDP. After slipping to 13th in 2000, India climbed to 9th in 2020 and 5th by 2023. By 2029, its share in global GDP is expected to grow from 3.5% to 4.5%. Morgan Stanley also predicts that India’s growth rate will remain between 6.3% and 6.5%, with the potential for further acceleration. Should that happen, India’s per capita income is projected to reach $6,706 by 2035.
The report unequivocally signals that India is firmly on its way toward developed nation status, prompting a closer look at the factors driving this transformation.
Domestic Demand: The Growth Engine
India, with a population of 1.4 billion, is the world’s largest consumer market — and it is this demand that underpins the nation’s economic surge. Increasing domestic consumption is fueling growth on both economic and fiscal fronts. A growing middle class, rising entrepreneurial activity, enhanced purchasing power, and improved infrastructure are all combining to boost production and stimulate the economy.
Despite global headwinds and economic uncertainty — including ongoing trade wars and restrictive policies led by the United States — India’s growth remains resilient. Analysts have long warned of a potential U.S. recession due to these restrictions, particularly those introduced under former President Trump. In this context, Morgan Stanley’s bullish outlook on India provides a welcome note of optimism.
Policy Support and Infrastructure Investment
India’s government has actively supported economic growth through tax relief measures aimed at the middle class. Finance Minister Nirmala Sitharaman emphasized that tax cuts would leave more disposable income in people’s hands, which, in turn, would boost demand and production. That projection is now materializing, as consumption patterns indicate.
Urban-rural divides are narrowing, and a significant segment of the population has moved out of poverty, enhancing national purchasing power. Inflation has also been largely contained, adding to positive momentum. The Reserve Bank of India has loosened monetary conditions by lowering interest rates and easing liquidity norms, resulting in more affordable loans and EMI relief for consumers.
The central government’s record-breaking investments in infrastructure — including flagship programs like Bharat mala, extensive railway modernization, and expansion of urban connectivity — have streamlined economic activities. These improvements not only reduce logistical barriers but also attract more investment and enable broader economic participation.
Importantly, the infrastructure push extends beyond roads and railways to digital networks. Enhanced internet access and rising digital literacy are empowering everyday Indians to engage more fully in the economy.
Service Sector and Technological Leadership
India’s service sector — particularly IT, outsourcing, and finance — continues to be a global powerhouse, contributing significantly to GDP growth. The country’s leadership in fintech, healthcare, and digital platforms, including the widely adopted UPI (Unified Payments Interface), exemplifies how innovation is fueling expansion.
India’s investments in renewable energy are also pivotal. The nation has set an ambitious target of 500 gigawatts of green energy capacity by 2030. Meanwhile, the government is upskilling its massive youth population to ensure sustainable employment and income growth.
Global Interest and Strategic Policy
The Indian government has launched various production-linked incentive schemes to stimulate manufacturing, prompting significant foreign investment from global corporations. At the same time, it is advocating for free trade agreements that could open even more markets to Indian businesses.
Morgan Stanley’s report emphasizes India’s extraordinary growth potential and asserts that with continued policy consistency and resilience in the face of global challenges, India could emerge as a global leader in economic innovation and investment.
India’s strategic planning and long-term reforms have already fortified its position among the world’s economic powerhouses. If the nation stays the course, it’s not just on track to become a top economy — it’s poised to help define the future of global growth.
