India Could Become World’s Third-Largest Economy by End of FY 2025–26: Finance Minister

Finance Minister Nirmala Sitharaman has said that India has the potential to emerge as the third-largest economy in the world by the end of FY 2025–26, supported by recent tax reforms and continued growth momentum.

 

Reform-Driven Growth

Speaking in an interview, Sitharaman highlighted that over 400 goods and services have seen GST rate cuts, adding to earlier relief in income tax. These measures, she said, would significantly boost economic activity, household consumption, and employment generation.

“The combination of income tax relief and GST rationalization will provide the much-needed thrust for India’s economy,” Sitharaman explained.

 

Demand and Investment Outlook

The minister noted that lower GST rates on essential goods, automobiles, and housing materials will increase purchasing power, leading to stronger demand across multiple sectors. This, in turn, will encourage private investment, expand production, and create jobs.

She stressed that sectors like real estate, automobiles, and manufacturing will directly benefit, while services will also see expansion as consumer spending grows.

 

Global Positioning

Sitharaman stated that India’s economic resilience has been proven despite global headwinds. With rising domestic demand and reforms-driven efficiency, India is on track to surpass economies ahead of it.

 

Political Context

Responding to opposition claims that reforms were politically motivated, Sitharaman clarified that GST 2.0 was designed as part of a long-term strategy for structural growth, not as a short-term measure.

 

Outlook

Experts suggest that if current growth momentum continues, supported by tax reforms and global trade diversification, India will comfortably secure its position as the world’s third-largest economy by the targeted timeline.