India's banking sector must raise USD 4 trillion in capital over the next two decades to support the country's goal of becoming a developed economy, known as ‘Viksit Bharat,’ by 2047.
A report by HSBC Mutual Fund highlights the crucial role of financial growth in achieving this ambitious target.
India’s economy is projected to expand significantly, with its GDP expected to rise from USD 3.4 trillion in 2023 to USD 30 trillion by 2047. This rapid economic growth requires financial and banking assets to grow at an even faster pace.
The report states that India’s financial assets, valued at USD 6.4 trillion in 2023, must grow nearly 19 times to USD 120 trillion by 2047. Banking assets, currently at USD 3.1 trillion, will need to increase to USD 45 trillion, marking a 14.5-fold surge.
For this to happen, India’s banking sector will need to secure an additional USD 4 trillion in capital over the next 20 years. This investment is necessary to create a multiplier effect, boosting business investments, industrial growth, and infrastructure development.
A well-developed financial sector is key to economic expansion, as it provides credit, investments, and other financial services that drive growth.
The report also compares India’s financial sector with other major economies. Currently, the United States leads with USD 135 trillion in financial assets, followed by China at USD 78 trillion and Germany at USD 21 trillion.
India’s financial sector, though much smaller today, must grow rapidly to sustain the country’s economic ambitions. Expanding financial assets at this scale will be essential to match the global economic landscape.
A strong banking system will not only provide necessary capital for growth but also boost global confidence in India’s economy. Attracting foreign investment will be a crucial aspect of this transformation.
The banking sector’s ability to mobilise and distribute capital efficiently will determine India’s success in achieving its long-term economic goals.
The report also predicts that India’s GDP could nearly double to USD 7 trillion by 2030 from its current level of USD 3.4 trillion. However, sustaining high growth over the next two decades remains a challenge.
The ability to expand the financial sector at the required pace will be a deciding factor in reaching the USD 30 trillion GDP target.
If India manages to meet these financial requirements, it will not only achieve its ‘Viksit Bharat’ goal but also establish itself as a major global economic power by 2047.
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