India's economy could reach $5.1 trillion by FY29 under a base case scenario, according to an analysis released Friday by OmniScience Capital. The projection is supported by improving banking sector health and steady real GDP growth.
The investment firm projects a nominal GDP growth of 8 per cent annually in US dollar terms. This projection assumes 6.5 per cent real growth, 4 per cent inflation, and a 2.5 per cent rupee depreciation per year. Under an optimistic scenario featuring 7 per cent real growth and 2 per cent annual rupee depreciation, the investment firm estimates the economy could reach $5.9 trillion by FY29 and $11 trillion by FY35.
India's GDP stood at $4.1 trillion in FY26, representing a nominal compound annual growth rate (CAGR) of just 5.4 per cent since FY19. This growth rate fell short of the 10.2 per cent annual growth required to meet the government's original $5 trillion target set in that year.
OmniScience Capital attributed the historical shortfall to three primary factors. These include the 4.15 per cent GDP contraction recorded in FY21 during the Covid-19 pandemic, the twin balance-sheet stress that affected both banks and corporates, and a sharp 12.3 per cent depreciation of the rupee against the US dollar in FY26 alone.
Despite past challenges, the firm observed that economic conditions are turning more favourable. Real GDP growth averaged 7.4 per cent between FY22 and FY26, which is higher than the 6.2 per cent average recorded over the preceding two decades.
Furthermore, bank balance sheets are currently reported to be at their healthiest in 20 years. Corporate balance sheets are also positioned for capital expenditure, which OmniScience Capital describes as a potential inflection point for sustained economic growth.
"The macroeconomic indicators highlighted in this analysis point to a maturing financial ecosystem in India. With healthier bank balance sheets and steady real GDP growth averaging 7.4 percent between FY22 and FY26, businesses and startups have a more stable foundation for long-term capital expenditure and expansion. Entrepreneurs must monitor these broader macroeconomic shifts closely as they plan their capital requirements and growth strategies in the coming years." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
