India’s goal of becoming a 5-ton economy by 2025 is impossible, says former RBI governor Rangarajan News – India
Rangarajan was interacting with the students in “The $5 Trillion Goal” as part of the IIT-Madras Shaastra technology festival.
“People have been talking about India becoming a $5 trillion economy by 2025. It’s an aspirational goal. Today, our GDP is close to $2.7 trillion. So reaching $5 trillion is nearing double our GDP,” he said.
“If you have to go from $2.7 trillion to $5 trillion in economy, it’s going to take seven years if the economy grows at 9 percent a year and eight or nine years if it grows to 8 percent a year,” he said.
“It rules out of reaching $5 trillion by 2025, as we are not in that region at all. In fact, in the first quarter of the year, GDP growth is 5% and in the second quarter it was 4.5%. For 2019-20, the growth rate cannot exceed 5%. By 2020-21, perhaps the economy can pick up and even then, growth cannot exceed 6%. So we’re not about 8% or 9% of the growth required to reach the $5 trillion economy,” he said.
He said a sustained growth rate of the economy of between 8% and 9% was needed to achieve it, and that per capita income should also double from $1,800 to $3,600.
As for the economic slowdown, he said: “As of now, the economy is slowing. GDP, which is a measure of the overall performance of the economy, has slowed considerably. The investment rate has fallen from 35.2% six years ago to around 27% in the current. There is a significant decrease in the investment rate. If the economy needs to grow, the investment rate is one of the important factors. We have to address the problem.”