India to Hit $5 Trillion Economy in FY29 as IMF Revises Forecast

According to the IMF’s latest report, India is now expected to achieve a $5 trillion economy in FY29, a year later than earlier forecasts. The revised timeline takes into account weaker GDP growth in dollar terms and a depreciating rupee, altering previous expectations significantly. 

IMF Revises India’s Economic Milestone to FY29 

The International Monetary Fund (IMF) has updated its forecast, stating that India is projected to cross the $5 trillion economic mark in FY29, instead of FY28. The revised estimate is due to a mix of slower nominal GDP growth and changes in the rupee-dollar exchange rate.  

India is predicted to cross the $4 trillion mark in FY26 and reach $4.96 trillion in FY28, falling just short of the target that year. Compared to 2023 projections, the latest FY28 figure is nearly $0.5 trillion lower, indicating a notable downward revision. 

Impact of Rupee Depreciation on Dollar GDP 

The key reason behind the shift in the dollar value of India's GDP is the depreciation of the rupee. Previous estimates assumed ₹82.5 per dollar for FY25, but the latest forecast pushes this to ₹84.6. For FY26 and FY27, exchange rates are now expected to weaken further to ₹87 and ₹87.7 respectively.  

Such depreciation has pulled down dollar-denominated GDP, thereby extending the timeline for reaching the $5 trillion target. 

Read More: Ind-Ra Revises India's FY26 Economic Growth Projection Up to 7%! 

Nominal GDP Growth Projection Slows 

Nominal GDP growth has also been moderated in the new forecast. For FY26, the projection stands at 8.5%, which is lower than the 11% estimated earlier. In FY27, nominal GDP growth is expected to be 10.1%.  

Due to currency effects, growth in dollar terms will remain muted at 5.5% in FY26 and 9.2% in FY27. The real to nominal GDP growth differential has narrowed recently, influenced by lower inflation. 

India Remains a Fast-Growing Major Economy 

Despite delays in hitting the $5 trillion milestone, India continues to be ranked among the fastest-growing large economies globally. Supported by robust domestic demand and potential policy reforms, the economic outlook for India remains positive, even though assumptions like prolonged US tariffs have drawn criticism from Indian authorities. 

Conclusion 

The IMF’s revised forecast puts India's $5 trillion economy goal in FY29 instead of FY28, driven by a softer rupee and moderated nominal growth. Nonetheless, India is still expected to retain its position as one of the top-performing economies globally in the near term. 

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