India must sustain the economic momentum

BUOYED by the International Monetary Fund’s (IMF) favourable forecast, India has become the fourth largest economy in the world, overtaking Japan. Only the US, China and Germany are ahead now, and the Niti Aayog is hopeful that if everything falls into place, India will reach the third position in around three years. It is apparent that India is coping better with heightened global trade tensions and Trump-induced tariff uncertainties than other major economies. This is a heartening sign, but there is no room for complacency. Sustained efforts need to be made to ensure that the gains are not frittered away.

India has admirably showcased its economic resilience in recent years, particularly in the post-Covid era. It has also done well to withstand the global impact of the wars in Ukraine and Gaza. According to the IMF, India will remain the fastest growing major economy over the next two years. This shows that the country’s macroeconomic foundations are robust and capable of sustaining the momentum in a challenging international environment.

The new economic milestone should spur the Union Government to make India a go-to destination for global investors. In a welcome outreach, Prime Minister Narendra Modi has urged various states to attract greater investments by removing policy bottlenecks. He has rightly stressed that no goal is impossible if the Centre and states work together like “Team India”. For that to happen, there is a dire need to reduce the trust deficit in the case of Opposition-ruled states. Moreover, it seems that everything is not hunky-dory on the FDI front. While the gross inflows remain healthy, the net FDI — the difference between gross inflows and outward investments by Indian companies as well as funds taken out by foreign entities — crashed by more than 96 per cent in 2024-25 compared to the previous year. In the best interests of Indian economy, this development should invite sincere introspection and course correction.

Editorials