India to become 3rd largest economy by 2028, predicts BofA-ML report

A report by Bank of America-Merrill Lynch has said that in the next decade, India will overtake Japan to become the third largest economy.

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The factors that will enable this are reduced dependency on other nations, financial maturity, and higher income and affordability.

The report also adds that India is likely to become the world’s fifth largest economy by 2019.

As per data available in the report, India is likely to cross Germany and Japan in nominal GDPThe gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period; you can think of it as the size of the economy... by 2028, assuming that the nation witnesses a 10% growth every year for the next 10 years. There are three factors that will enable India to achieve this goal.

Firstly, reduced dependency ratios are expected to raise saving and investment rates. This is likely to fund 7% real growth.

Secondly, financial maturity, due to financial liberalization and inclusion, should continue to lower lending rates structurally.

Finally, increasing incomes and affordability will likely underpin the emergence of mass markets, supporting an expected 7% real GDPThe gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period; you can think of it as the size of the economy... growth.

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