Union Finance Minister Nirmala Sitharaman said here on Thursday that with the highest growth rate in the second quarter of the current financial year India has become the fastest-growing economy in the world.

Speaking at the winter session of Parliament, the finance minister said the Indian economy had grown from the tenth-largest economy in 2014 to the fifth-largest economy in 2023.

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Moreover, the country had the most significant growth in the July-September quarter at 7.6 per cent, she said, adding India is currently the fifth largest economy in the world behind the US, China, Germany and Japan.

“India’s second quarter growth is the highest in the world as India continues to be the fastest-growing economy. The third and fourth largest economies (Japan and Germany) have contracted as well as emerging economies. In comparison, India’s over 7 per cent growth is significant,” she elaborated.

The finance minister said in the Rajya Sabha that the economic activity in the country has been good across sectors and all segments are growing significantly.

The manufacturing sector registered its highest growth of 13.9% in Q2FY24. Sitharaman credited this to the “Make in India” initiative by PM Modi as well as the numerous production-linked incentive (PLI) schemes launched under the BJP government.

Replying to a short-duration discussion on the economic situation in the country in the Rajya Sabha, the finance minister said India was the second most sought-after manufacturing destination in the world.

She warned against comparing India’s PMI with global counterparts, as developed nations’ report contradicts numbers while India was in an expansionary stage.

The FM stated that India recorded 9.43 per cent y-o-y growth in October 2023 at $62.26 billion. “In spite of the consumption and demand coming down in western economies, our exports are doing well.”

Direct tax collection grew 21.82 per cent this year and monthly Goods and Services Tax collections stabilized at Rs 1.6 lakh crore, as a sign of economic growth, she said.

“States receive 100% of state GST, nobody touches it. 50% of IGST also goes to states while 41% of CGST share is given to states based on the finance commission’s recommendations,” the minister said.

Recently, a report released by S&P Global Ratings said India is set to become the world’s third-largest economy by 2030, and in 2026-27, India’s GDP is expected to grow 7 per cent.

S&P said India is expected to grow at 6.4 per cent in 2023-24 as compared to 7.2 per cent in the previous financial year. The rating agency said the growth rate will remain at 6.4 per cent in 2024-25 before climbing to 6.9 per cent in the next and 7 per cent in 2026-27.

Budget 2024 is not to have any ‘spectacular announcement’

In a separate development, while speaking at the CII Global Economic Policy Forum, the finance minister said the budget to be presented on February 1, 2024 would not have any spectacular announcement as it would be a vote on account in the run-up to the general elections

“It is a matter of truth that the February 1, 2024 budget that will be announced will just be a vote on the account because we will be in an election mode. So the budget that the government presents will just be to meet the expenditure of the government till a new government comes into play,” she said.

You will have to wait till after the new government comes in and presents the next full Budget in July 2024, she said.