India Will Be $4 Trillion Economy in FY25: Sanjeev Sanyal
Recently, Finance Minister Nirmala Sitharaman in the press said that India is expected to overtake Japan and Germany and will be the world’s third largest economy by 2027.
India will be the USD 4 trillion dollar economy in 2024-25 and surpass Japan by starting next fiscal year to become the world’s fourth-largest economy.
Economic Advisory council to prime minister(EAC-PM) member Sanjeev Sanyal said on Thursday.
As Sanyal said that Growth of 7 percent in the economy will be a “Very Good” growth rate for india, given lots of issues, including the country’s weak exports.
“So, in this financial year, we will become the USD 4 trillion economy,” he said in an event.
Recently, Finance Minister Nirmala Sitharaman said that India is expected to overcome Japan and Germany to become the world’s third-largest economy by the year 2027
If we calculate in US dollar terms, India is at fifth largest economy with a GDP of USD 3.7 trillion in Nominal terms.
Sanjeev Sanyal said India is very close to Japan as close as USD 4.1 trillion.
“So, either very close to this year or even next year, India will cross Japan to becoming the world’s fourth largest economy,”
According to Sanyal, Germany is stucked at USD 4.6 trillion economy and it is not moving forward, so India can make it a static target.
“So Maybe in two years of period, India will cross Germany. so, I think to become the world’s third largest economy, we are very near to the target,” Sanyal said.
By Arguing with the government, Sanyal said the government should not push any financial move to accelerate economic growth to 8-9 percent.
“If you get it, great, but anything around 7 percent compounded over time is a very good growth rate.
“We shouldn’t get too excited about 9 percent,” he said.
India Will Be $4 Trillion Economy, Sanyal said compounding of growth is one of the most important things as this will benefit to accelerate the jobs in the country and taxes.
On the other side the ABD(Asian Development Bank) and Fitch ratings have given an estimation of India’s growth at 7 percent, the (IMF) international monetary fund, S&P
Global ratings and Morgan Stanley have projected a growth of 6.8 percent growth rate of Financial year 25.
Sanyal said, “We dont have to get emotional about trying to achieve very high rate in any particular year, will gradually see the growth”
Sanyal said, that there are other countries, for eg. Southeast Asia which were in our position in the middle of ’90s.
“Soon You will remember Indonesia, Thailand, and so on, and for a while, they were doing great. and then it all blew up in the Asian crises,” he said.
Sanyal signifies that there is no need to mess with the financial system that is trying to support the growth of India.
“Do not mess around with your fiscal system, monetary system, your account and so on” he added
In responding to the question on the internationalization of the rupee, Sanyal said it is about converting the rupee into a hard currency.
“We are not attempting to become the world’s anchor currency,” “We only aspire over the next decade or so to become the hard currency like many others,” he added
Sanyal stated that India’s goal for the next decade is to transform the rupee into a widely accepted hard currency, especially for the country’s trade.
This involves enhancing its stability, increasing convertibility, and boosting its use in international transactions.
The aim is to reduce reliance on dominant currencies and strengthen India’s economic sovereignty. Achieving this would significantly enhance India’s global economic influence.
“This is the currency is which other governments in the world can hold their reserves in terms of being a part of the IMF SDR Basket. so its a limited objective,” he said.
Sanyal highlighted that the government has implemented measures such as an inflation rate targeting mechanism to support this goal. These efforts aim to stabilize the rupee and establish it as a commonly used hard currency, particularly for transactions related to India. By doing so, the rupee could gain wider acceptance and bolster India’s economic stability and influence globally.
Conclusion:
Sanyal’s statement highlights India’s aim to transform the rupee into a hard currency within a decade, focusing on its wider use in international trade. Achieving this involves ensuring economic stability, increasing convertibility, and negotiating trade agreements. Strengthening financial infrastructure and building market confidence are also crucial. This strategy aims to enhance India’s economic influence and reduce reliance on dominant currencies.