New Delhi: India will become a USD 5.6 trillion economy by 2020, according to research firm Dun & Bradstreet, which has predicted a three-fold jump in the country's GDP from USD 1.7 trillion last fiscal on the back of rapid investment and growing consumer expenditure.
"Indian economy will become a USD 5.6 trillion economy by fiscal 2020, at current market price, from the USD 1.73 trillion in fiscal 2010-11," Dun & Bradstreet India Senior Economist Arun Singh said.
The rate of investment, consumer expenditure and infrastructure spending will be the driving force behind the country's economic growth over the next 10 years, he said, adding that these conclusions are part of a D&B report -- titled, 'India 2020' -- which is scheduled to be released tomorrow.
The share of discretionary spending is projected to increase considerably to 72 percent of private consumption expenditure from around 60 per cent in FY'10.
Besides, the share of the services sector is expected to surge from 57.3 percent of the GDP in FY'10 to 61.8 percent in FY'20.
Another major contributor to the growth would be rapid investment in the infrastructure area. Infrastructure sector spending is expected to rise to 12.1 percent of the GDP by FY'20 from around 7 per cent of the GDP in FY'11.
In terms of regions, eight states -- Maharashtra, Gujarat, Andhra Pradesh, Bihar, Madhya Pradesh, Rajasthan, Orissa and Uttar Pradesh -- would contribute 71 percent of the total GDP in the next 10 years, as compared to 66 percent in FY'10.
Further, the report said Maharashtra, Gujarat and Andhra Pradesh will be amongst the most developed states in the country by 2020 and would together contribute 32 percent to the overall GDP.
The BIMAROU states (Bihar, Madhya Pradesh, Rajasthan, Orissa & Uttar Pradesh) are also expected to contribute significantly to India's growth story during the current decade.
The contribution of BIMAROU states will be about 24 per cent of the GDP by FY'20, as compared to 21 percent during FY'10, Singh said.
Notably, four of the five BIMAROU states are expected to see a double-digit average growth over the current decade.
Apart from the investment rate, consumer expenditure and infrastructure spending, growth would also hinge on effective policy measures that would encourage sectors like manufacturing and retail.
"At the policy end, direct cash subsidy, NREGA, UID, environment and national manufacturing policies, FDI in some of the sectors such as retail and insurance, would play a pertinent role in India's growth story," Singh added.
He further said coordination between the state and central governments would help in removing bottlenecks to growth.
When asked whether inflation and hardening of interest rates would play spoilsport to growth, Singh said, "In a short term, definitely, this is cause for concern... But we have seen a moderate economic growth in India. The story is so far quite encouraging. If we remove that fiscal 2011-12, we are at better position compared to our counterparts."