India's growth story: FM Sitharaman says nation on track to be world’s third-largest economy; dismisses fears over bank privatisation

India is on course to become the world’s third-largest economy soon, Finance Minister Nirmala Sitharaman said on Tuesday, highlighting the country's rapid economic transformation, fiscal discipline, and resilience amid global uncertainty.

Addressing students at the Delhi School of Economics, Sitharaman said India’s steady climb from the world’s tenth-largest economy in 2014 to the fifth today demonstrates the strength of its growth story and policy reforms, PTI reported.

“What is making us literally stand out is the fast movement from the tenth largest economy in 2014 to fifth and the fourth, and now sooner, probably to the third,” Sitharaman said, adding that 25 million people have been pulled out of multidimensional poverty in recent years.

The finance minister said India’s banking system has undergone a remarkable recovery from the “twin balance sheet” stress that public sector banks faced nearly a decade ago. She expressed confidence that the Centre will achieve its fiscal deficit target of 4.4% of GDP, pegged at Rs 15.69 lakh crore, for FY26.

Bank privatisation won’t undermine inclusion, says FM
Sitharaman sought to dispel concerns that privatisation of public sector banks could dilute financial inclusion or national interest. She argued that while bank nationalisation in 1969 helped push government programmes and priority lending, it failed to make banks efficient or truly inclusive.

“Nationalisation did help in pushing priority sector lending and government programmes, but government control made public sector banks unprofessional,” she said, quoted PTI.

She added, “So, this perception that when you try to make them professional, and if you want to privatise them — which is a Cabinet decision — that objective of taking banking to everyone will be lost, is incorrect.”

The finance minister highlighted that after professionalising public sector banks, financial inclusion goals are being “beautifully achieved” while banks now stand out for their improved asset quality, net interest margins, and credit growth.

Banking reforms and consolidation drive
Sitharaman also pointed to the significant reforms in the banking sector under the Modi government, including the consolidation of public sector banks from 27 in 2017 to 12 by 2020.

In 2019, the government sold its 51% controlling stake in IDBI Bank to the Life Insurance Corporation of India (LIC) and later invited expressions of interest for further divestment of a combined 60.72% stake held by the government and LIC.

In August 2025, Sebi approved the reclassification of LIC as a public shareholder post-privatisation, paving the way for a strategic sale of IDBI Bank.

Major PSB mergers — including the amalgamation of Oriental Bank of Commerce and United Bank of India with Punjab National Bank, Syndicate Bank with Canara Bank, and Andhra Bank with Union Bank of India — have streamlined operations and enhanced efficiency.

“When banks are allowed to function professionally and their decisions are board-driven, every objective of national and banking interest will be served,” Sitharaman said.

The finance minister reiterated that India’s banking sector now reflects the strength of a reformed economy — one that is well-positioned to support the nation’s march toward becoming a global economic powerhouse.



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