'Easily coverable... we will grow faster than rest': Kotak MF's Nilesh Shah on India’s GDP rank drop

India’s recent slip to the sixth-largest economy is a “temporary blip” driven by technical adjustments and currency movements rather than any deterioration in underlying fundamentals, said Nilesh Shah, Managing Director of Kotak Mutual Fund and a member of the Prime Minister’s Economic Advisory Council. He maintained that India remains firmly on track to become the world’s third-largest economy over the next decade.

Technical factors

Reacting to the latest International Monetary Fund (IMF) data that showed India dropping from fourth to sixth position, Shah explained that two key factors led to the revision. First, the country updated the base year used for GDP calculations, which altered the way economic output is measured. Second, the rupee depreciated by nearly 10% over the past year, reducing the dollar value of India’s GDP. “Both these factors together brought our GDP from above $4 trillion to below $4 trillion,” Shah said in an interview with ANI.

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No structural slowdown

Despite the ranking change, Shah dismissed concerns of any structural slowdown in the economy. He acknowledged that the development merits attention but stressed that it does not indicate a reversal in growth momentum. “Should we be concerned? Yes. But does this mean the economy is going in reverse? Absolutely not,” he said, underscoring that India’s growth trajectory remains intact.

Decade-long progress

Placing the development in a longer-term context, Shah highlighted the country’s steady climb in global economic rankings over the past decade. India has moved from the 10th-largest economy in 2014 to the sixth position today, marking a significant improvement in a relatively short span. He emphasized that the gap between India and higher-ranked economies is not substantial and can be bridged with sustained high growth. “The difference between India and the economies ranked above it is easily coverable. We will continue to grow faster than most of the world,” he noted.

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Third-largest economy goal

Looking ahead, Shah pointed to IMF projections indicating that India is still expected to become the third-largest economy by 2031. While earlier estimates had suggested this milestone could be achieved by 2027 or 2028, he acknowledged that the timeline has been pushed back slightly. “We have taken a step back of two to three years, but the broader direction remains unchanged,” he said.

Focus on growth

On the nature of India’s economic expansion, Shah stressed the importance of inclusive growth. He argued that India’s model should not rely on the dominance of a single company or entrepreneur but instead focus on broad-based development across sectors and regions. This approach, he said, is better suited to a large and diverse economy like India.

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Policy continuity

Shah also underscored the role of policy continuity and structural reforms in sustaining growth. He noted that India’s rapid rise in the rankings reflects a consistent policy framework and ongoing reforms aimed at boosting productivity and investment. With continued focus on capital formation, innovation, and inclusive development, Shah expressed confidence that India will regain momentum and steadily climb the global economic ladder.