India’s GDP to hit $5 Trillion by FY29 | Which Sector To Look for the Next 10 Years?

Since 2019, India aspires to become the third-largest economy in the world to become a $5 Trillion economy. The country expected to achieve this landmark by FY21, but with Covid-19, GST, Demonetization impact, and other hindrances, this target looks to be postponed. Now, IMF has come up with its expectation of the possible time frame that India might take to become a $5 trillion economy. Further, the Indian retail industry is one of the most dynamic and fast-paced industries due to the entry of several new players. It accounts for over 10% of the country’s gross domestic product (GDP) and around 8% of the employment. India currently is the 4th Largest retail market in the world and it is a combination of the organized and unorganized markets with the dominance of the unorganized market at around 75%. Recently BCG-RAI has launched a report showcasing the potential growth of the retail sector in the next 10 years. So, let’s discuss this in brief in this article as we move ahead.

When will the Indian Economy reach the $5 Trillion mark:

As per the report of the International Monetary Fund (IMF), the Gross Domestic Product (GDP) or the economy of India can cross the value of $5 Trillion by the end of FY29.
For the achievement of this target, the growth expectation of nominal GDP (Real GDP+Inflation) in FY22 was 19.4%, 13.4% in FY23, 12.7% in FY21, and above double-digit figure in the coming years as well.
The important thing one needs to note down here is that this achievement has to be done in Dollar terms and not in Indian currency terms.

India’s Retail Sector:

BCG-RAI realized a report stating that India’s retail sector is expected to grow $2 trillion (~Rs. 150 Lakh Cr.) in the next 10 years with a CAGR growth rate of 10%.
3 years ago, the shares of the organized and the unorganized sector were 12% and 88% respectively. Whereas the organized sector also includes e-commerce like amazon and Flipkart etc.
Currently, the organized sector has a share of 25% and the rest is unorganized. The distribution of the organized sector is as follows 7% is of e-commerce and 18% is of the companies like avenue supermarket, Big Bazaar, etc.
E-commerce in India is expected to reach $130 billion (Rs. 9.75 Lakh Cr.) by 2026, as compared to $45 billion (Rs. 3.37 Lakh Cr.) in 2021, according to the report.
The growth of the organized sector in this 3 year is more than double, hence the demand is increasing for the organized sector their growth will continue.
Avenue Supermarket is performing very well in the organized sector and is trading at a premium valuation.

What should Investors do?

The retail sector in India is growing faster and it’s the potential to grow most in the organized sector. After the pandemic the retail sector has seen immense growth, the Investor can consider retail sectors stocks with full discipline and have a staggered manner of investing.

Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.