India Will Beat Germany To Become Fourth Largest Economy By 2026 The statement came weeks after the IMF forecast revealed that Germany and Italy will slip into recession next year
By Teena Jose
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RBI deputy governor Michael Patra has said that India will match Germany's GDP, over $4 trillion in 2021 and become the fourth-largest economy by 2025 to 2026. He also said that, by 2027 India will surpass Japan (nearly $5 trillion GDP) and becomes the third-largest economy. The statement came weeks after the IMF forecast revealed that Germany and Italy will slip into recession next year.
"India's population will become the largest in the world next year and it's the youngest. It will demand the world's best financial intermediation services. The reach and spread of the banking network have improved the mobilization of financial resources in the economy," said Patra at a recent RBI event.
Patra added that, "The number of deposit accounts per thousand population has increased to over 1600 from 43 in 1972. Households currently account for 63 per cent of total bank deposits. This is also reflected in the rise in the ratio of per capita credit to income to 51.3 per cent from 12.2 per cent over the period from 1972 to 2022."
"Even as the size of the banking system has grown. The share of smaller loans up to INR 10 crore in total loans has increased to 60 per cent in 2022 from 45 per cent in 2014. This transformation has brought in its trail of associated changes in assessment, risk management and pricing of loans," he said.
According to the IMF World Economic Outlook, the German economy is expected to shrink by 0.3 per cent in 2023 and the multilateral institution has forecast India's GDP to grow at 6.9 per cent with tight monetary conditions slowing growth to 6.1 per cent in FY24.
