India likely to become third biggest economy behind US, China by FY 28

KATHMANDU: India is likely to become the third-biggest economy behind the US and China by fiscal year 2028, two years earlier than initially expected, overtaking Germany and Japan, according to the International Monetary Fund (IMF) World Economic Outlook database. It also projects India going past the UK this year to become the fifth biggest economy, The Economic Times reported. A look at the projections: India’s progress

• Most developed economies hit hard by pandemic and war-triggered inflation
• They will grow marginally or even go into recession
• India’s growth also took a knock but economy expected to expand at good pace
• Rupee has depreciated less than many currencies against the dollar

…but not just relative outperformance

• India has sound macro fundamentals
• Inflation high, but is not skyrocketing Current account deficit high but expected to moderate
• Forex reserves down but still at nearly $550 b Fiscal situation is comfortable
• Banks are in a strong position and credit cycle is picking up

*India had overtaken the UK in the Jan-Mar quarter. FY23 will be the first full year when India will go past the UK