Mumbai, May 14 (IANS): Financial markets play a crucial role in capital mobilisation and allocation, and the stability of government is the first criterion for the Indian stock indices to make a difference to the growing economy, Finance Minister Nirmala Sitharaman said here on Tuesday.

Addressing an interactive ‘Viksit Bharat 2047’ session focused on the Indian financial markets at the Bombay Stock Exchange (BSE), the Finance Minister said, that standing here at the BSE, "I want to clearly lay before you that Prime Minister Narendra Modi's third term will be a stable, good governance regime".

"More governance and less government is what we are looking forward to. We are confident that PM Modi will complete his third term where India will become the third largest economy," FM Sitharaman told the gathering.

The performance of the Indian stock market is being aided by a good gross domestic product (GDP) growth forecast, inflation being at a manageable level, and political stability at the central government level.

"This has made India the fastest-growing economy. Most investors who visit India are keen to see where their money can be placed or parked," the Finance Minister said.

India has fared relatively well compared with other countries as far as the government debt to GDP ratio is concerned and the country is the third least indebted nation among low- and middle-income countries (LMIC).

The Finance Minister said the stability in policy -- particularly taxation -- predictability in policy-making and the soft-touch regulatory framework are the high points in which markets function without volatility.

The performance of India's financial markets has also exceeded people’s expectations in the recent past.

"It has performed with distinction at a time when global markets are fluctuating, there is so much volatility, and a fear of uncertainty setting in most markets. Even in this atmosphere, Indian stock markets have performed very well, attracting both foreign and domestic investors," the Finance Minister said.

"The adoption of technology has made a big difference to the performance of the stock market," she added.