According to a recent report by global brokerage firm Jefferies, India is well on its way to becoming one of the largest economies in the world. The report outlines India’s strong economic growth over the past decades and provides projections for the future.

A Growing Giant 

India is currently the fifth largest economy globally with a GDP of $3.6 trillion. However, the country has seen tremendous growth over the past 10 years, with its GDP increasing at an average rate of 7% annually in US dollar terms. Several important reforms like the bankruptcy law, GST implementation, and demonetization have boosted India’s economy despite some short-term disruptions. 

Jefferies analysts expect India’s stellar growth to continue. By 2027, they project India’s GDP will hit $5 trillion, making it the third largest economy globally – surpassing Japan and Germany. This rapid growth would cement India’s position as the fastest growing major economy in the world.

A $10 Trillion Market 

Along with strong GDP expansion, India’s equity markets have also delivered impressive returns. Over the past 5, 10, 15 and 20 years, Indian markets have generated average annual returns of around 10% in US dollar terms. 

Buoyed by continued reforms, rising foreign investments, and a thriving startup ecosystem, Jefferies estimates India’s stock market capitalization will reach $10 trillion by 2030. This would make India one of the top three markets globally by that time. 

The report cites robust corporate earnings, increasing listings of Indian tech giants, and growing domestic investor participation as factors that can propel the market to this milestone. A $10 trillion market capitalization would be impossible for global investors to ignore.

Factors Driving Growth

Jefferies analysts point to several structural strengths that position India for continued economic ascendancy:

  • Supportive global geopolitics and excellent relations with major economies and regions like the US, Japan, and Middle East. 
  • A booming startup ecosystem that is now home to over 100 unicorns, reflecting entrepreneurship and innovation. 
  • Emergence as a leading exporter of services like IT and business outsourcing. 
  • A strong corporate culture focused on shareholder returns. Well-regulated markets and growing retail investment are boosting equity participation.
  • Large-scale reforms in sectors like banking, real estate, and taxation that are bearing fruit despite short-term disruptions.
  • Demographic dividend of a large, young workforce entering the labor market each year.

With these fundamental tailwinds, Jefferies expects India’s economic rise to continue apace in the coming years. If the projections hold true, India will cement its place among the world’s largest and most influential economies.