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India's nominal GDP may cross $2-trn in FY15: Nomura

During FY12-14, nominal GDP growth averaged 13.4 percent YoY, but was offset by currency depreciation. “In FY15-FY17, we expect nominal GDP to average around the same 13-13.5 percent YoY, but with a better composition of lower inflation and more real growth,” says Nomura.

September 10, 2014 / 08:22 AM IST

Moneycontrol Bureau

India's nominal GDP is expected to cross the USD 2-trillion mark this fiscal after being stuck in the USD 1.8-1.9 trillion range for the last three years, according to a Nomura report. Going ahead, Nomura expects nominal GDP to reach nearly USD 3 trillion by FY17.

At USD 1,995.8 billion (based on current prices), in 2014, India ranked tenth in terms of nominal GDP ranking. India's nominal GDP in 2013 stood at USD 1,876,797 million, according to a World Bank list.

But after a stellar 5.7 percent rise in first quarter GDP, many economists and experts have revised their full year GDP growth forecast to closer to the 6 percent mark.

During FY12-14, nominal GDP growth averaged 13.4 percent YoY, but was offset by currency depreciation. “In FY15-FY17, we expect nominal GDP to average around the same 13-13.5 percent YoY, but with a better composition of lower inflation and more real growth,” says Nomura.

Also, forex strategists at Nomura are bullish on the Indian rupee in the medium term, expecting it to trade at 58 per dollar by end-2014 and at 55.8-56 in 2016-17.

Economists at Nomura also believe that nominal GDP per capita too will rise from around USD 1500 in FY14 to above USD 2000 in FY17, with concomitant rise in real incomes. “Higher real per capita incomes would increase domestic purchasing power and boost consumption demand,” the report adds.

According to World Bank’s International Comparison Program (ICP) figures, both China and India, despite their large economies, rank low in terms of per capita GDP. As per the ICP report, China ranked 99, while India stood at 127 in per capita economic output.

The growing size of the domestic market is also expected to attract more capital inflows, as portfolio and FDI investors will likely seek to capitalize on a bigger pie.

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