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Gary Dugan – The Roadmap for India to Become a US $5 Trillion Economy

Investment Outlook , Published Feb 18, 2020

4 min read

Gary Dugan


India’s journey to becoming a $5 trillion economy is an ambitious aspiration which is spoken about quite often. But the question is how can India overcome the current challeges and grow at a rapid pace to achieve this goal?

What would it look like?

If we were to achieve this, the Indian economy would rank number three in the world replacing the Japanese economy. India’s population is 10x than that of Japan which only reinforces the potential upside this would have in the coming decades.

How could it happen?

The Indian authorities will have to accelerate several initiatives to achieve its goals. Such changes will need to be transformational. With regard to economic development, the government can only achieve so much with short term fixes such as tax cuts and short bursts of spending on growth.

Empower and unleash the consumer*

  • In the longer term, there will be significant migration of workers from agriculture into manufacturing and service sectors. Worker productivity will rise, allowing for a substantial rise in income per head of Indian families. The rapid growth of better-paid workers will accelerate the development of middle-class families. In 2012, according to studies, 620 million people in India were defined under the middle-class category. Imagine 620 million people, nearly twice the population of the United States becoming richer, spending more on health care, education and consumer goods.
  • Abhay Soi

    Private investment in the third calendar quarter of 2019 was down 59 percent year-on-year indicating that the Reserve Bank of India has to increase the availability of credit to companies.

  • India is already the second-largest electronics market in the year and is estimated to have grown at over 40 percent per annum between 2017 and 2020. By 2022 India is projected to have over 820 million smartphone users.

Unfreeze the financial sector

An economy can only be at its best when you oil the wheels. Access to loans and development capital is credit which needs to be extended for the smooth running of the economy. Private investment in the third calendar quarter of 2019 was down 59 percent year-on-year indicating that the Reserve Bank of India has to increase the availability of credit to companies. The increased availability of capital is the pathway to India’s future.


To its credit, the government has had a reform agenda from the moment it took office. However, such reforms need urgent acceleration. The reform of land and labour regulations and further efforts to encourage financial inclusion will attract more foreign direct investment (FDI) across the economy. Currently, the FDI is 1.5 percent of GDP and India needs to increase it back to 3 percent of GDP to achieve its goal of a $5 trillion economy. Additionally, domestic companies need to be empowered to lead the country’s growth.

What would it mean?

Domestically it would lead to a more modern, inclusive India. Economic growth would fund a greater pace of positive change for the population. Further, investing in infrastructure, education, and healthcare along with the support of a robust financial system would accelerate this.

The Roadmap for India

  • India would be even more empowered to sit at the high table of global leaders to shape the future of the global economy.

    One would hope that a generally non-aligned geopolitically independent India can act as a bridge between the historic axis of G8 and the new economies of the east.

    The friction between the US and China, the US and Russia needs a counterweight and India has a role to play as an influential voice in the global multilateral discussion.
  • India would be an even more significant contributor to global growth, an economy too big to ignore.

    India is already an important consumer market which is ranked as the world’s sixth-largest, the 10th largest importer and 19th largest exporter.
  • The opportunity in the Indian assets and financial markets is enormous.

    Analysts believe that there are over $150 billion stressed assets which could provide significant opportunities to investors. Such assets include opportunities in the Steel, Power, Textiles, Engineering and Telecom industries.

As the country develops, we expect the corporate culture of the Indian economy to change with less emphasis on family-owned businesses in the longer run. Today, the free market capitalisation of India’s equity is only around 50 percent as families typically own a controlling stake in their companies. While quite natural at this stage of India’s emergence as an economic powerhouse, in the longer run that ratio can only rise as companies become modern-day corporates with a diversity of shareholders and more efficient balance sheets.

The Roadmap for India 2

About Gary Dugan

Gary Dugan is the Chief Executive Officer at The Global CIO Office. He has over 37 years of experience in leadership roles at some of the leading global financial services businesses like JPMorgan, Barclays and Merill Lynch.

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