“So, this financial year, we will become a USD 4 trillion economy,” he said at an event here.
Recently, Finance Minister Nirmala Sitharaman said that India is expected to overtake Japan and Germany to emerge as the world’s third-largest economy by 2027.
Currently, in US dollar terms, India is the fifth largest economy with a size of about USD 3.7 trillion in nominal terms.
Sanyal said Japan is now just a little ahead of us at 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,” Sanyal added. According to him, Germany is a USD 4.6 trillion economy and it is not growing, so makes it a static target. “Maybe in two years, we will go past Germany. So, I think in terms of becoming the world’s third largest economy, we are reasonably now close to the target,” he said.
Sanyal argued that the government should not push any fiscal move to accelerate economic growth to 8-9 per cent.
“If you get it, great, but anything around 7 per cent compounded over time is a very good growth rate.
“We shouldn’t get too excited about 9 per cent,” he said.
Sanyal said compounding of growth is the single most important thing as this will generate jobs and taxes.
While the Asian Development Bank (ADB) and Fitch Ratings have estimated India’s growth at 7 per cent, the International Monetary Fund (IMF), S&P Global Ratings and Morgan Stanley projected a 6.8 per cent growth rate for FY25.
“Do not get emotional about trying to hit a very high growth rate in any particular year,” he emphasised.
Sanyal pointed out that there are other countries, for example in Southeast Asia, which were in our position in the mid-90s.
“You will remember Indonesia, Thailand and so on, and for a while, they were doing very well. And then it all blew up in the Asian crisis,” he said.
Sanyal emphasised that there is no need to mess around with the financial system trying to support growth.
“Do not mess around with your fiscal system, your monetary system, your current account and so on,” he said.
Responding to a question on the internationalisation of the rupee, Sanyal said it is about converting the rupee into a hard currency.
“We only aspire over the next decade or so to become a hard currency like many of the others, we are not attempting to become the world’s anchor currency,” he added.
Sanyal said India’s limited purpose is to convert the rupee into a hard currency over the next decade in terms of its wider usage as the currency in which people trade, in particular, the country’s own trade.
“It is a currency in which other governments in the world hold their reserves in terms of being a part of the IMF SDR basket. So, that is a limited objective,” he said.
In that context, Sanyal said, the government has done a few things, including an inflation rate targeting mechanism.
“…So that the rupee essentially becomes a commonly used hard currency, at least commonly used for things relating to India,” he said.
