- What is the formula for a 5 trillion dollar economy? Five leading economists of the country are telling
- Rajeev Kumar Vice Chairman NITI Aayog, DK Joshi Chief Economist Chrysiles, Madan Sabnavis Chief Economist Care Ratings, Saugata Bhattacharya Chief Economist, Axis Bank, Prof. Ram Singh Delhi School of Economics
new Delhi. The latest government data showed that the unemployment rate in the country was the highest at 6.1% in 45 years. The country’s gross domestic product (GDP) was the lowest in five years at 6.8%. Growth is slowing down worldwide. The agricultural growth rate in the country has slowed down. There is uncertainty about crude oil prices and international trade. In such a challenging time, the Government of India has set a target of doubling the country’s economy to $ 5 trillion by the next 5 years i.e. 2024-25. Bhaskar learned from 5 leading economists and subject matter experts how this ‘Great Indian Dream’ of the government will be fulfilled. NITI Aayog Deputy Chairman Rajiv Kumar says that the average GDP growth in the country from the year 2003 to 2011 has been 8.5%, so even today it is possible.
Rajiv Kumar said that the GDP growth is expected to be seven percent in 2019-20. At the same time, it may remain 7.5 percent next year. In such a situation, we will be able to double the GDP from the real growth of 8.5 to 8.75 percent in the next three years. However we must take some steps. As private investment has decreased. It has gone up to 10 per cent. There are a lot of problems in the financial sector. The government is going to take steps in this regard soon. According to Crisil’s Chief Economist DK Joshi, the target of $ 50 trillion can be found, but it is not easy. The government will have to do more reforms.
Joshi says that the ease of doing business will have to grow. First of all, a GDP growth rate of more than eight percent per year is required. Many nations of the world like South Korea, China etc. have done this kind of work. We have to improve performance in the manufacturing sector. Export has to be increased. The government will also have to pay special attention to education and health for sustainable development. Investment will have to be increased, which is equal to 30 percent of GDP at present, it has to be increased from 34 to 35 percent.
In this year’s budget presented by Finance Minister Nirmala Sitharaman, some announcements have been made to increase FDI. Madan Sabnavis, chief economist at CARE Ratings, says that even if the inflation rate is considered to be four per cent as per RBI estimates, a growth rate of nine per cent per year would be necessary for an economy to double in five years. Special attention should be given to SMEs and export sector. These two also provide employment. At present, the biggest problem is the industry getting loans at low interest rates. However, during the last year itself, banks have reduced the NPA and the government has given about 70 thousand crore rupees in the budget. Banks also need to be strengthened so that company specific projects can be completed easily.
Saugata Bhattacharya, chief economist at Axis Bank, says India’s economy will reach $ 30 trillion by March 2020. In such a situation, the target of 20 trillion will be achieved in the next four years. To achieve this target, it would be necessary to increase the GDP rate from 7.5 to 8 percent every year. Along with doubling the income of the farmers, agricultural growth rate will have to be increased from around 3 percent to 4.5 percent. Rural growth rate will have to be seven percent. Along with this, investment in infrastructure (the government has said hundred lakh crores which is right), SME sector has to be increased. Domestic savings are not sufficient in the country, so foreign investment will be required. As far as Prime Minister Narendra Modi’s big cake is concerned, it is right that everyone will get the benefit of it. Not only will employment increase but consumer demand will also increase. Everyone will get the benefit of growing economy.
Professor Ram Singh of Delhi School of Economics says that there should be revival in real estate sector, this will increase employment. Export will have to be better and during this period, better monsoon and agricultural production is also necessary. Eight percent GDP growth will not be enough, nine percent growth is necessary. This is possible only when there is a easy loan from a bank, a public private partnership (PPP). Special attention will be paid to construction, infrastructure and agro-based industries to increase employment. If the economy grows, then everyone will benefit. Also, the government will also have additional tax revenue which it will be able to invest in the development of weaker sections. If the economy doubles, per capita income will also increase by about 70 to 75 percent. Government investment in infrastructure has to be increased. India can take advantage of the ongoing trade war in US-China. Electronic and car manufacturing companies set up in China are looking to remove their plants, so India has an opportunity. The biggest challenge currently is employment.
Sudeep Sen, Head Industrial Manufacturing and Engineering, TeamLease Services, said if the government meets the target, the infrastructure sector will get 25 to 30 percent more employment in five years. The annual employment growth will be seven to 10 percent in the auto and auto component sector, eight to 10 percent in the power sector, five percent in the service sector. Whereas in the travel and hospitality sector there will be 12 to 15 per cent employment growth. All accept the need to increase exports. The growth in exports during the year 2018-19 was around nine per cent.
When asked how much export growth should be done to double the economy, Federation of Indian Export Organization (FIEO) President Sharad Kumar Saraf says that compound growth should be at least 12 per cent. We are getting a large quantity of Inkyari but due to lack of competitive price we are lagging behind countries like Sri Lanka, Vietnam and Bangladesh. Industry should get a boost and its contribution to GDP should be 25 per cent.
How challenging is the goal, understand these seven indicators-
GDP: 8-9% growth rate for 5 years
- Current Position: GDP growth in the year 2018-19 was 6.8%. This growth rate is the lowest in the last 5 years. Decrease in domestic consumption was the main reason for slowing GDP growth.
- What to double ?: 8% GDP growth rate according to economic survey. According to experts, 8 to 9% average GDP growth rate will have to be achieved for the next five years.
Investment: to be increased to 34 percent:
- Current status: Right now the investment rate is around 30%. According to the UN report, India is among the top 20 countries attracting foreign investment during 2017-18. Foreign investment grew 14.2% in 2018-19.
- What to double ?: Investment needs to be accelerated. This rate will have to be increased to 34-35% of GDP. The government will have to formulate policies to encourage foreign capital investment in many sectors.
Inflation rate: 4 percent to be maintained:
- Current Position: The Consumer Price Index stood at 3.4% during 2018-19. While the wholesale price index is 4.3%. Inflation has declined in both rural and urban areas. It is under control.
- What to double ?: The consumer price index has to be controlled within 4% for five years. Which is quite challenging. Inflation will depend on the price of crude oil, global peace and monsoon etc.
Agriculture: 4.5% growth rate for 5 years.
- Current status: The contribution of agriculture sector in the Indian economy is around 14.4% in the year 2018-19. The actual growth rate of agriculture and allied sector was 2.9% in the year 2018-19. Whereas it was 5% last year.
- What to double ?: Farmers’ income has to be doubled. The growth rate of agriculture and allied sectors has to be at least 4 to 4.5%. This will require that the monsoon be normal in the country. The food processing sector will have to grow.
Infrastructure: Private investment to be increased:
- Current Status: The government has currently made infrastructure its top priority. Currently about 7 lakh crores. It is being spent annually. National highways are being constructed around 28 km daily.
- What to double?: 100 lakh crore in the budget speech. Has announced spending in the next 5 years. The government will have to increase investment in this sector through BOT, PPP, TOT etc. Foreign investment will also have to increase.
Rupee: Around 70 per dollar will be kept:
- Current status: The rupee is currently priced at 68.89 against a dollar. During the year 2018-19, the rupee has depreciated 7.8 percent against the dollar.
- What to double ?: In order to increase foreign trade, the rupee has to be kept continuously low against the dollar (70 rupees or below) in the next 5 years.
Exports: 12 percent increase should be:
- Current Position: During the year 2018-19, the growth in exports was 9.06%. 331 billion dollars were exported.
- What to double ?: The growth in the export sector should be 12 per cent or more for the next five years. For this, the government will have to promote MSME and industrial sector. So that the products of the exporters can be competitively priced.