FM sees India as 3rd largest economy within a year after Modi secures his third term

Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman reiterated on May 9 that India will become the third-largest economy in the world in the coming year or so after Prime Minister Narendra Modi potentially forms the government for the third time in a row.

"The (Narendra) Modi government will be formed again for a third term. India's economy will reach the third place from the fifth place in the coming year or so, as per the prime minister's announcement," Sitharaman said at an event in Jharkhand capital Ranchi on May 9. "For this, we need Jharkhand's contribution and to achieve this, I would say, vote for the wellbeing of the country and for corruption-free governance. We do not want Jungle Raaj in Jharkhand."

The Lok Sabha elections are currently underway in India with Modi seeking a third term as the prime minister.

Sitharaman's comments indicates a steeper timeline for India attaining the third spot from being the fifth-largest economy in the world compared to her November 2023 statement that the nation may surpass Japan and Germany to the third spot by 2027.

Last month, the International Monetary Fund (IMF) raised India’s FY25 GDP growth forecast by 30 bps to 6.8 percent from its January forecast of 6.5 percent, citing bullish domestic demand conditions and a rising working-age population.

On May 8, chief economic advisor V Anantha Nageswaran said that there is a high possibility of India’s economic growth touching 8 percent in FY24.

India's gross domestic product (GDP) grew 8.4 percent in the December quarter, data released by the Ministry of Statistics and Programme Implementation on February 29 showed. As a result, the full-year GDP growth is seen to be even higher than its unexpectedly high first advance estimate of 7.3 percent. The second advance estimate now pegs the GDP growth at 7.6 percent for 2023-24.

Sitharaman rubbished claims that the central government was meting out "step-motherly" treatment to Jharkhand citing a "record-breaking" allocation of Rs 7,234 crore for railway projects for the state in the interim Budget for FY25. This stands in sharp contrast to the annual allocation of Rs 457 crore by the previous Congress-led regime during 2009-14, she said.

The finance minister highlighted the need for reforms in Jharkhand at all levels. "When there is corruption in a state like Jharkhand that is full of prospects, there is a need for reforms at all levels. The state needs proper electricity supply, better road connectivity, and reduction in dependence on minerals and there should be attempts to make the state a manufacturing hub."

She said that eastern state needs to focus on bringing in investments to bring value addition to its mineral reserves, and added that migration was a serious problem as well.

"The talent of youth in Jharkhand is getting wasted as they have to move out of the state for opportunities due to lawlessness, rampant corruption, lack of business environment, and the practice of treating wealth creation as a rent seeking opportunity," Sitharaman said.