India has set an ambitious target of achieving a $30 trillion economy by 2047, according to a recent report by the Boston Consulting Group (BCG) titled “Banking for a Viksit Bharat,” which was released during the FICCI-IBA Annual Conference. The report highlights the crucial role that the financial services sector, particularly banks, will play in this transformation, outlining the need for a robust capital base and strategic changes within the banking industry to meet the country’s economic goals.
The Path to a $30 Trillion Economy
India is currently the fifth-largest economy in the world, with a GDP of around $3.5 trillion. To achieve a tenfold growth and reach $30 trillion by 2047, which marks 100 years of India’s independence, the country will need a rapid and sustained expansion across various sectors. The BCG report emphasizes that financial services, particularly the banking sector, will be a key driver in this process.
India’s banking system will need to grow 20 times its current size to support the targeted GDP growth. This means substantial capital infusion, technological innovation, and policy reforms to enhance the financial sector’s efficiency. The report estimates that banks will need a $4 trillion capital base to facilitate this growth, with one-third of this—about $1.3 trillion—requiring fresh capital deployment over the next two decades.
Banks as the Cornerstone of Economic Growth
India is a predominantly bank-led economy, and the banking sector will play a pivotal role in achieving the country’s economic goals. The report suggests that banks will anchor the financial sector’s growth, although other financial asset classes like insurance, mutual funds, and digital finance will also grow rapidly.
Currently, the Indian banking system is in a strong position, characterized by high profitability, robust capital adequacy, and a significant reduction in non-performing assets (NPAs). The BCG report notes that these favorable conditions provide a solid foundation for future growth. However, the path to $30 trillion will require banks to undergo structural shifts, including growing their deposit base, improving asset quality, enhancing productivity, and advancing digital capabilities.
Ruchin Goyal, Managing Director and Senior Partner at BCG, and Co-author of the report, acknowledged that while the goal is ambitious, it is also achievable with the right strategies. “India’s banking system is in a strong position today, acting as a launchpad for the Viksit Bharat mission. It will have to build for the next two decades through structural shifts—growing deposits, enhancing asset quality, and improving productivity, while advancing digital capabilities and future competencies,” he said.
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Financial Inclusion and Technological Innovation
A key priority for India’s banking sector, as highlighted by the report, will be promoting financial inclusion. MV Rao, Chairman of the Indian Banks’ Association (IBA), stressed that ensuring financial inclusion is critical for fostering economic growth. He pointed out that creating opportunities for every individual to participate in and contribute to the nation’s progress will be essential.
“To fuel inclusion and credit growth, we must continue to innovate and reimagine our deposit strategies, aligning them more closely with our customers’ evolving needs and preferences. This growth will be aided by our workforce’s full potential, which must be harnessed using digitisation and emerging technologies like GenAI,” Rao remarked.
The adoption of emerging technologies such as artificial intelligence, especially Generative AI (GenAI), will play a crucial role in driving this transformation. Digitization has already revolutionized banking in India, particularly with the introduction of the Unified Payments Interface (UPI), which has made digital payments accessible to millions. Going forward, continued investments in digital infrastructure will help banks improve operational efficiency, customer service, and financial inclusion.
Capital Requirements and Growth Strategies
The report stresses that a $4 trillion capital base is essential to support the projected economic expansion. Out of this, approximately $1.3 trillion will need to be fresh capital deployment. This capital will be used to expand the banking system’s ability to extend credit, support large-scale infrastructure projects, and fund businesses across sectors, including small and medium enterprises (SMEs).
Banks will also need to focus on enhancing deposit growth to support their lending activities. This will involve offering new financial products tailored to the evolving needs of customers, both in urban and rural areas. With increasing competition from fintech companies, traditional banks must innovate to retain and attract customers.
Conclusion
India’s journey toward becoming a $30 trillion economy by 2047 will largely depend on the financial services sector’s ability to adapt, innovate, and grow. The BCG report makes it clear that banks will be at the heart of this transformation. With a solid foundation already in place, the Indian banking sector is well-positioned to drive economic growth, but it will require significant capital investment, technological advancement, and strategic reforms to meet the ambitious goals set for the coming decades.
