India on course to become world's 3rd largest economy: CEA Nageswaran

Chief Economic Advisor V. Anantha Nageswaran said India is on track to become the world's third-largest economy, with Q3 FY26 GDP at 7.8% and full-year growth at 7.6%. He noted India's strong post-Covid growth and the AI ecosystem as drivers of sustained 7% real and 10–11% nominal growth.

Chief Economic Advisor (CEA) V. Anantha Nageswaran on Friday said there is no doubt that India will become the third largest economy in the course of the next few years, as the country's real GDP growth rate was estimated at 7.8 per cent for Q3 FY26 in the new series with 2022-23 as the base year, and 7.6 per cent for the full financial year.

Answering an IANS question at a press conference here, Nageswaran said that our growth rate post-Covid has been probably one of the best, if not the best, in the world -- especially among the G20 economies.

"But naturally, whether a particular relative position is reached or not, will also depend on many other factors, like the exchange rate. which in India's case did not go in our favour in 2025. That will naturally have an impact," he said.

The CEA further said that what we need to focus on is on aspects in our control.

"Both the policy and the reform directions are paving the way for sustained non-inflationary growth of at least 7 per cent in real terms, and 10 to 11 per cent in nominal terms in India," Nageswaran told IANS.

He further elaborated that with trade agreements and the current state of the AI ecosystem in India, what was once considered a drawback in 2025, "could actually turn out to be India's strength".

India's combined tax-to-GDP ratio has risen to 19.6 per cent, reflecting improved tax compliance and stronger participation by states, according to a Bank of Baroda report. While central tax revenue remains lower, ongoing reforms focused on simplification, digitisation and widening the tax base are expected to drive further gains. The upcoming Income Tax Act, 2025 is likely to boost transparency and formalise more of the informal economy, as tax collections are now growing faster than nominal GDP, signalling healthier revenue buoyancy.IANS

"These things will improve capital flows and stabilise the exchange rate. The dollar value of the Indian GDP will reflect better the true underlying performance of the Indian economy in rupee terms in the years to come," the CEA said.

Dr Saurabh Garg, Secretary, Ministry of Statistics and Programme Implementation (Mospi), told IANS that the picture of the Indian economy, which the revised GDP series presents, is a much more robust and accurate picture.

"Where these numbers will actually lead, that's the numbers themselves will say," he added.

(With inputs from IANS)