In the year 2019, the Indian economy was worth $ 2,700 billion.
Former Reserve Bank of India governor C Rangarajan says that in the current circumstances, it is impossible for the Indian economy to reach $ 5,000 billion by the year 2025. He said on Friday that to achieve this target, the GDP growth rate of nine per cent per annum will have to be achieved for the next five years.
Addressing the 11th convocation of ICFAI Foundation for Higher Education, Rangarajan said that efforts should be made to deal with the adverse impact of the third wave of Kovid-19. If this happens, there will be a need to increase investment on health infrastructure within the total infrastructure investment along with increasing the coverage of vaccination. Rangarajan said, “A few years ago it was expected that India would become a $5 trillion economy by 2025. Now it’s impossible. In the year 2019, the Indian economy was worth $ 2,700 billion. We will be at this level by the end of March 2022. To reach from $2,700 billion to $5,000 billion, the economy will have to achieve a growth rate of nine per cent for five consecutive years.
9.5 percent growth forecast
While announcing the monetary policy today, the Reserve Bank has retained the GDP growth forecast for the financial year 2021-22 at 9.5 percent. Governor Shaktikanta Das said that it is estimated to be 7.9 percent in the second quarter, 6.8 percent in the third quarter and 6.1 percent in the fourth quarter. Real GDP growth for the first quarter of the financial year 2022-23 has been estimated at 17.2 per cent.
Emphasis will also have to be given on increasing the expenditure
He said growth should be the government’s biggest concern for a $5,000 billion economy. It is also the solution to many socio-economic problems. Equity is also important, but without the support of higher growth through reforms, it is far-fetched. Rangarajan said, “With the improvement in revenue, spending can also increase, because there is no need to bring the fiscal deficit below the budget target of 6.8 per cent of GDP.” A sharp increase is needed to make up for the loss in production during the period.
The economy has started showing improvement again
The former chairman of the Prime Minister’s Economic Advisory Council said that economic activities had come to a complete standstill due to the lockdown imposed to curb Kovid-19. He said that after the relaxation of the lockdown restrictions, now the economy has started gaining momentum again.
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