India’s 5-Trillion-Dollar Goal Pushed Back By One Year, IMF Now Expects Milestone In FY29 Instead of FY27

Mumbai: According to the latest staff consultation report released by the International Monetary Fund (IMF), India is now expected to become a 5-trillion-dollar economy in FY29, instead of the earlier expected FY27. This means the target has been delayed by one year.

IMF says this delay is mainly because of slower GDP growth and a weaker Indian rupee against the US dollar.

India May Touch 4 Trillion Dollars This Year

IMF estimates that India will cross the 4-trillion-dollar mark in FY26.

However, in FY28, India's GDP is expected to be 4.96 trillion dollars, which is just short of the 5-trillion target.

Earlier, in February 2025, IMF had estimated India’s FY28 GDP at 5.15 trillion dollars, which is now 200 billion dollars lower.

The difference from IMF’s 2023 estimate is even bigger. In 2023, IMF expected India’s FY28 GDP to reach 5.96 trillion dollars. This means the estimate has fallen by almost 0.5 trillion dollars in two years, mainly due to the rupee becoming weaker.

Rupee Weakness Is the Biggest Challenge

IMF says the weakening rupee is having the most impact on India’s dollar-based GDP.

It expects the rupee to fall to Rs 87 per dollar in FY26 and further to Rs 87.7 per dollar in FY27.

GDP Growth Estimates Also Reduced

IMF has also cut India’s nominal GDP growth forecasts.

For FY26, nominal GDP is expected to grow 8.5 percent, compared with the earlier estimate of 11 percent in 2024.

In FY27, it may grow 10.1 percent.

In FY26 Q1, nominal GDP grew 8.8 percent, only slightly higher than real GDP growth of 7.8 percent. Economists say this gap may reduce further if inflation remains low.

India Still Among the Fastest-Growing Economies

Despite the delay, IMF says India will remain one of the fastest-growing major economies in the world.

Strong domestic demand and ongoing reforms will support growth.

IMF adds that India’s outlook could improve further if trade agreements progress and more reforms are implemented.

However, Indian officials have disagreed with some IMF assumptions. They called the IMF’s estimate about the US maintaining a 50 percent tariff as “conservative.”

Further Rupee Weakness May Delay the Target More

If the rupee becomes even weaker than IMF’s prediction, India’s dollar-GDP may fall further.

On 21 November, the rupee touched a low of Rs 89.49 per dollar, and on 26 November, it closed at Rs 89.23 per dollar.

Although the 5-trillion-dollar target is now delayed by a year, IMF says India’s strong economic fundamentals keep its long-term growth outlook positive.