India will be the third largest contributor to the global gross domestic product (GDP) this year, Chief Economic Advisor, Dr V. Anantha Nageswaran said on Thursday.

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In his address at the interactive session organised by FICCI, Nageswaran said: "We were the 10th largest economy in 2014, and we expect to become the third-largest economy in 2027."

According to him, to achieve that the country has to continue to "do the right thing".

He mentioned that India's contribution to global GDP growth has risen six-fold since the turn of the millennium. "India is set to become the third-largest contributor to global GDP this year," Nageswaran said.

According to him, India's real GDP growth for FY23 was a robust 7.2 per cent, with expectations for the final figure to be even higher.

"We have had two successive good years, strengthening the recovery from the pandemic-induced contraction," he said.

The lower growth figures reported in the third quarter of FY23 were due to base effect adjustments, not a loss of economic momentum, he said. For FY4, the GDP growth rate will be 6.5 per cent, a figure supported by both the Ministry of Finance and the Reserve Bank of India.

He further underlined the government's commitment to continue to be fiscally responsible while supporting the economic recovery, citing a declining fiscal deficit target from 5.9 per cent to an intended 4.5 per cent by FY26.

For the medium term, Nageswaran stressed on the importance of energy security and the need for a managed transition away from fossil fuels. Furthermore, he stressed on the need for educational reforms to mitigate the impact of the pandemic on years of lost schooling and to harness the potential of India's demographic dividend.

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