Impossible for India to become $5 trillion economy by 2025: Rangarajan
India's economy was $2.7 trillion in 2019, and by the end of March 2022, the country would be at the same level.
Addressing at the 11th Convocation of ICFAI Foundation for Higher Education on Friday, former Reserve Bank of India (RBI) governor C Rangarajan said that India cannot become a $5 trillion economy by 2025, as the country needs to grow at 9% per annum in the next five years, under the current circumstances, in order to achieve that. He also added that attempts should be made to curb the adverse impact of the Covid-19 pandemic’s third wave, and both the vaccination coverage and pace of investment in health infrastructure should be boosted within the overall infrastructure investment.
He also said that India’s economy was $2.7 trillion in 2019, and by the end of March 2022, the country would be at the same level.
Fiscal deficit need not be reduced
For the country to achieve a $5 trillion economy, growth should be showed undivided attention by the government as it is the answer to many of the socio-economic problems. Also, equity is also important and will be a distant dream if not well supported by high growth spurred by reforms.
He also added that there is no need to reduce the fiscal deficit, below the budgeted level of 6.8% of GDP, as expenditures can be increased, with improvement in revenues. Fiscal consolidation may start from the next financial year, he said.
The economist also said that the country needs a faster rate of growth to make up for the loss of output in the last two years and must start building the foundation for a quicker growth this year itself.
He added that in 2021, India’s GDP fell by 7.3%, USA by 3.5%, France by 8.1% and the UK by 9.8% as the economy came to a grinding halt due to the Covid-19 pandemic induced lockdowns to curb the spread of the infection.