Sanjeev Sanyal, Member, Economic Advisory Council to the Prime Minister (EAC-PM), on Thursday (May 16, 2024) predicted that Indian economy will reach $4 trillion in 2024-25.
Also, India will overtake Japan early in the upcoming fiscal year to rank as the fourth-largest economy in the world, Sanyal said at an event, according to media reports.
He further said that a 7% economic growth rate would be ‘very good’ for India, given various barriers, including the country’s weak exports.
“So, this financial year, we will become a USD 4 trillion economy,” he said.
Recently, Finance Minister Nirmala Sitharaman also said that by 2027, India’s economy is predicted to surpass Germany and Japan to become the third largest in the world.
Currently, Indian economy stands as the fifth largest in US dollars, with a nominal value of approximately USD 3.7 trillion.
According to Sanyal, Japan currently stands slightly ahead of us, with a GDP of USD 4.1 trillion.
“So, either very early next year or even you know this year, we will cross Japan to become the world’s fourth largest economy,” said Sanyal.
According to him, Germany’s GDP is worth USD 4.6 trillion and is not growing, making it a static target.
He advised against pushing for 8-9% growth, suggesting that a steady 7% growth rate is sufficient for job creation and tax revenue through compounding.
Various agencies like the Asian Development Bank and Fitch Ratings forecast India’s growth at 7%, while the IMF, S&P Global Ratings, and Morgan Stanley project 6.8% for FY25.
Sanyal cautioned against risking financial stability to chase high growth rates, referencing Southeast Asian countries that faced crisis after rapid growth in the 90s.
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He emphasized the importance of maintaining fiscal and monetary stability and avoiding excessive regulation in the financial system.
On the internationalisation of the rupee, Sanyal clarified that India’s goal is to make the rupee a hard currency within the next decade, facilitating wider trade use and holding international reserves, rather than becoming the global anchor currency.
The government has implemented measures like inflation targeting to support this transition, aiming for the rupee to be a commonly used currency in trade related to India.
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