India Set to Become Third-Largest Economy by 2028, States to Play Key Role in Growth: Morgan Stanley
India Set to Become Third-Largest Economy by 2028, States to Play Key Role in Growth: Morgan Stanley ( Representational Image )
India is poised to emerge as the world’s third-largest economy by 2028 and is projected to more than double its GDP to \$10.6 trillion by 2035, according to a recent Morgan Stanley report.
The report predicts that by 2035, three to five Indian states — including Maharashtra, Tamil Nadu, Gujarat, Uttar Pradesh, and Karnataka — could each reach a Gross State Domestic Product (GSDP) close to \$1 trillion, positioning them among the 20 largest economies globally.
Citing current data, the report identifies Maharashtra, Gujarat, and Telangana as the top-performing states in economic terms. It also notes significant progress in states such as Chhattisgarh, Uttar Pradesh, and Madhya Pradesh, which have climbed the rankings over the past five years.
India is expected to contribute around 20% to global economic growth over the next ten years. This expansion is likely to make the country a major revenue generator for global corporations, the report added.
Morgan Stanley emphasizes that the collective performance of India’s 28 states and 8 Union Territories will be critical to sustaining this growth. States independently manage their finances and compete for investment by offering favorable policies and business environments.
The report credits “competitive federalism” — where states vie for capital and projects — as a driving force behind India’s rise. The effectiveness of this model, it argues, will determine whether India can become a global manufacturing hub, double its per capita income within a decade, and maintain momentum in its capital markets.
Infrastructure development has seen a significant boost, with central capital expenditure increasing from 1.6% of GDP in FY2015 to 3.2% in FY2025. This has led to substantial growth in transport and urban infrastructure — including a 60% increase in highway length, a doubling of airports, and a fourfold expansion of metro rail networks.
Flagship central government programmes such as PM Gati Shakti, the National Infrastructure Pipeline, Bharatmala, Sagarmala, and UDAN have been implemented alongside state-led initiatives. States continue to lead investments in key sectors like energy, water supply, and urban development.
The report concludes that sustained cooperation between the central government and states will be crucial to realizing India’s long-term economic aspirations.
