Thanks to the huge influx of cash from Sheikh Mansour, City are now scrapping it out at the top of the table, along with United, Arsenal and Chelsea.
Scholes said: ""They are definitely getting closer. Whether they are alongside Chelsea and Arsenal yet I am not sure. They would probably have to win something to become main rivals."
The former England star added: "I am sure this year they will be fighting for it and the same will be true in years to come with more improvement."
What is also true is derby day has taken on a different meaning.
Whilst clashes with City have always been a stepping stone towards a bigger prize for their neighbours, the Blues tended to build the success of their entire season around such matches.
That situation no longer remains the same, with both clubs not only anxious to gain local pride, but also to collect points in their quest for ultimate glory.
"It is more than local pride now," he said. "We are both going for trophies and we are both main rivals for trophies.
"Years ago, they were in the bottom half of the league, or not even in it, and we were always red-hot favourites.
"Even then it didn't necessarily mean we were going to win, as results proved. And they have better quality players now, which just makes matches against City even more interesting."