Forecasting India’s GDP in 2030 by using the Autoregressive Integrated Moving Average (ARIMA) Model
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A Finance Ministry report, released ahead of the 2024-25 Interim budget, claimed India’s GDP to touch $7 trillion by 2030. In this context, this study attempts to forecast India’s GDP for 2030 by using the Autoregressive Integrated Moving Average (ARIMA) model. Quarterly data on Gross Domestic Product (GDP) for India from the first quarter of 2010 (2010-Q1) to the first quarter of 2023 (2023-Q1) is used to account for quarterly fluctuations in GDP which may be hidden in an annual time-series data. This study follows the Box-Jenkins methodology for running the ARIMA model. This takes care of the non-stationary nature of the time-series data. Further, rigorous analysis of goodness of fit measures for model-building and appropriate diagnostic tests ensures the reliability and accuracy of the forecast. Accordingly, this study finds that the ARIMA (2, 1, 4) model is the best model for forecasting. The major finding of this study is that the GDP forecast for India in 2030 falls below $7 trillion by a considerable amount. This indicates that the dream of a $7 trillion Indian economy by 2030 necessitates the Indian economy to grow at a higher pace than recent and current trends.
