India set to overtake Japan as world’s third-largest economy

NEW DELHI: T V Somanathan, Finance Secretary, Government of India stated that India is well on its track to becoming the third largest economy. Currently, India is ranked as the fifth largest economy globally, following the United States, China, Japan, and Germany.

While Speaking at a G20 event, Somanathan mentioned that India’s growth rate is faster than any of the top five economies, regardless of how it is measured.

He stated, “All four have lower growth rates than India, and today, we can safely say that all four are likely to have lower growth rates than India in the foreseeable future.”

While attending the BRICS summit in Johannesburg, South Africa, Prime Minister Narendra Modi also stated that the country is the fastest growing major economy, despite global turbulence, and is set to be a five trillion dollar economy soon.

According to the rating agency S&P Global, India’s GDP would increase 6.7 per cent yearly from financial year 24 to financial year 31, from 3.4 trillion dollars in the current fiscal year to 6.7 trillion dollars in 2031. However, it was noted that India will face significant challenges in the coming ten years to transform traditionally uneven growth into a high and consistent trend.
India’s short-term economic growth will be driven by a 678.6 million strong labour force, though getting more women to enter the workforce will be pivotal for future growth, as only 22 per cent of women participated in the workforce as of 2022, S&P said in its report.

Somanathan said, “We are also focused on improving the tax take. We have been removing lots of tax exemptions so that we can address it from both sides.”

One of the major reforms that have been suggested by economists ahead of the union budget (Financial Year 2024) was to remove tax exemptions in the sphere of personal income tax.

Somanathan also mention that the Indian diaspora can help the country in three ways including the flow of funds, creating demand for products made in their mother country, and opening up educational opportunities.
“Three broad ways of flows of funds are through remittances, investments, and philanthropy,” he added.