India aims to surpass Japan, achieve $4 Trillion economy in FY25

India is set to become a USD 4 trillion economy in the fiscal year 2024-25, surpassing Japan to become the world’s fourth-largest economy, according to Economic Advisory Council to the Prime Minister (EAC-PM) member Sanjeev Sanyal.

During an event in New Delhi, Sanyal emphasized that achieving a 7 percent economic growth rate would be significant for India, considering challenges such as weak exports. He projected that India would reach the USD 4 trillion mark in the current financial year.
Sanyal noted that Japan, with a GDP of USD 4.1 trillion, is slightly ahead of India. He predicted that India would surpass Japan either by early next year or even by the end of this year, becoming the fourth largest economy globally.

Germany, with a GDP of USD 4.6 trillion, is currently the fourth largest economy. Sanyal suggested that India could overtake Germany within two years.

He cautioned against pushing for fiscal measures to accelerate economic growth to 8-9 percent, stating that a consistent growth rate of around 7 percent is commendable over time. He highlighted the importance of compounded growth in generating employment and tax revenue.

While the ADB and Fitch Ratings have estimated India’s growth at 7 percent, the IMF, S&P Global Ratings, and Morgan Stanley have projected a growth rate of 6.8 percent for FY25.

Sanyal advised against striving for excessively high growth rates in any particular year, citing examples of Southeast Asian countries like Indonesia and Thailand, which faced economic crises despite initial growth spurts.

He stressed the importance of maintaining fiscal and monetary stability to avoid such crises. Regarding the internationalization of the rupee, Sanyal stated that India’s goal is to convert the rupee into a hard currency over the next decade, rather than becoming the world’s anchor currency.

He highlighted the government’s efforts to make the rupee widely used for trade and held as reserves by other governments, mentioning measures such as inflation rate targeting.

In conclusion, Sanyal reiterated India’s objective of achieving a 7 percent growth rate and gradually internationalizing the rupee, focusing on stability and sustainable economic growth.