Raamdeo Agrawal sees India entering a multi-trillion-dollar era, projects $16 trillion GDP by 2042

The latest Motilal Oswal Wealth Creation Study 2025 takes a long-term view of India’s economic potential, and Raamdeo Agrawal, Chairman & Co-Founder of Motilal Oswal Financial Services believes the country is now entering a multi-trillion-dollar growth phase.

According to him, India could realistically reach a $16 trillion GDP by 2040–42, driven by consistent compounding and a much larger economic base than before.

Agrawal explained that the last major phase of growth—called the Next Trillion Dollar (NTD) Era—took India’s GDP from $1 trillion to around $4 trillion over roughly 17 years. The timeline stretched slightly due to shocks like demonetisation and COVID-19, but the direction of growth remained intact.

Now, India is starting the next chapter — a journey from about $4 trillion today to about $16 trillion in the next 17 years. This new phase is far more powerful because the starting base is higher, and the scale of wealth creation is much bigger.

Agrawal’s argument for India reaching a $16 trillion GDP by around 2040–42 is simple: compounding. He says the study does not rely on complicated economic models. Instead, it looks at India’s historic growth patterns. If nominal GDP grows at around 12% over the next 17 years—roughly in line with the past—the economy will naturally quadruple.

Even if the number turns out slightly different, whether 10% or 13%, the final outcome will not change significantly. In his view, debating whether India reaches the milestone in 2040, 2042 or 2044 is missing the bigger picture. The important point is that the destination remains achievable as long as the country continues its compounding journey.

Agrawal emphasises that the path to $16 trillion will not be smooth. Just as the last 17 years saw shocks like the global financial crisis, demonetisation and COVID-19, the next 17 years will also come with their own disruptions. These events are unpredictable, he says, and each crisis arrives with a different name.

However, he believes these “potholes” do not change the long-term trajectory of growth. What matters is India’s ability to keep moving forward despite temporary setbacks.

He also believes that this expansion in GDP will be accompanied by an even faster rise in financial wealth. Agrawal expects India’s total stock market capitalisation to grow to somewhere between $20 trillion and $25 trillion by the early 2040s. While he calls these numbers aspirational, he remains confident that India is structurally positioned to achieve them.

Agrawal acknowledged that long-term forecasts can shift slightly, noting that India’s earlier journey from $1 trillion to $4 trillion took longer than expected because of policy paralysis and economic shocks. He added that while things look much better today, no one can assume the next 17 years will be perfectly smooth.

Agrawal then explained how rising per capita income will transform India’s consumption story. When an economy crosses the $3,000–$4,000 per capita range, spending patterns shift sharply because many categories are still deeply underpenetrated.

According to Agrawal, the most dramatic shift will come in automobile demand. He highlighted the example of China, where annual car sales jumped from around 4 million in 2007–08 to nearly 25 million within just a few years as incomes rose.

A similar acceleration, he believes, is likely in India, alongside a broad rise in discretionary spending on housing, premium products, travel, entertainment and other lifestyle categories.

However, he emphasised that the biggest long-term opportunity may not be consumption alone but the explosion in savings and investments. India has already seen a strong rise in financial participation over the past five to six years, but Agrawal believes the scale of what lies ahead is “multiple times bigger,” driven by expanding incomes, deeper markets and the financialisation of household savings.

For the entire discussion, watch the accompanying video

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