The Italian legend believes the Nerazzurri are more than capable of rubbing shoulders with the best teams in Serie A, and bemoaned AC Milan's declineInter have what it takes to challenge for the Scudetto alongside Juventus and Napoli.
The retired striker believes Serie A's unpredictability makes the league all the more exciting, but admitted that he is quite disappointed with AC Milan's regression this season.
"Inter can join the race for the Scudetto, which is not only about Juventus and Napoli. This season's Serie A is thrilling and hard to predict," Baggio told Corriere dello Sport.
"Juve are definitely the strongest, their ranking reflects their performances on the pitch. But the campaign is long and there is also the Champions League. It's a surprise that AC Milan have gone so bad."
Baggio also had a word on his recent project aimed at improving the youth system in the Italian game, which he believes is the key to returning Serie A to the upper echelons of world football.
"Many teams are now working with youth. The important thing as a young player is to have character, desire and passion.
"You have to start with the youth players, we should pay even more attention to them. As president of the technical sector of FIGC, I started a project with my colleagues to do just that.
"FIGS is evaluating it, but there has been no answer yet. I want to go forward with it. I hope it will be approved soon."