India likely to become $4 trillion economy in FY26 but lower inflation, softer rupee may delay $5 trillion goal

A cross-section of economists that CNBC-TV18 spoke to believe that by January next year, India will reach the $4 trillion mark. This is despite the economy growing more slowly in current prices due to falling inflation and, in dollar terms, owing to a considerably weaker exchange rate.

Economists estimate that even if nominal GDP slows to 8% growth in the current fiscal, it would still translate into a ₹357 trillion economy.

Strangely enough, this is almost the same as the FY26 Budget estimate of a ₹356.97 trillion economy. Assuming the rupee averages ₹88 to a dollar this year, India could still reach the $4 trillion mark in January 2026, economists estimate.

The Q1 GDP data has already demonstrated a slowdown in India’s nominal GDP growth rate to 8.8%, against the 10.1% pencilled in the FY26 Budget. Economists expect this growth rate to come down further to around 8% in the current fiscal.

Economists also believe that lower inflation and a weaker currency are likely to delay India’s ambition of becoming a $5 trillion economy by as much as two years. They say that instead of FY27, India may achieve the $5 trillion mark only by FY29. In January 2024, the Finance Ministry had estimated that India was likely to achieve the $5 trillion milestone in three years, that is, 2027.

The ministry had said, “In the next three years, India is expected to become the third-largest economy in the world with a GDP of $5 trillion… India can also aspire to become a $7 trillion economy by 2030 under a reasonable set of assumptions with respect to inflation and the exchange rate.”

For now, reaching the $5 trillion goalpost by 2027, as well as achieving the $7 trillion size by 2030, both seem improbable.