'India’s Goal To Become $5 Trillion Economy By 2025 Is Impossible': Former RBI Governor Rangarajan

Former Reserve Bank of India governor and former chairman of Prime Minister’s Economic Advisory Council C Rangarajan said that India’s aim to become a $5 trillion economy by 2025 is not possible with the ongoing economic growth rate.

“People have been talking about India becoming a $5 trillion economy by 2025. It is an aspirational goal. Today, our GDP is close to $2.7 trillion. Therefore, reaching $5 trillion is almost close to doubling our GDP,” Rangarajan said while interacting with students on “The $5 Trillion Goal” at IIT Madras Tech Fest ‘Shaastra’.

“If you have to move from $2.7 trillion to $5 trillion economy, it will take seven years if the economy grows at 9% per annum and eight or nine years if it grows at 8% per annum,” he said.

India’s growth rate has been slipping for five quarters now. The GDP growth for the September quarter slumped to a six-year low of about 4.5 per cent.

“Reaching $5 trillion by 2025 is rules out as we are not in that region at all. The GDP growth may not exceed 5% for 2019-20. For 2020-21, perhaps the economy may pick up and even then, growth may not exceed 6%. Therefore, we are not anywhere near 8% or 9% of growth which is required to reach the $5 trillion economy,” he said.

He said that sustained growth of the economy between 8% and 9% was needed to achieve it and the per capita income also should be doubled from $1,800 to $3,600.

Speaking about the economic slowdown, Rangarajan said: “As of now, the economy is slowing down. The GDP, which is a measure of the overall performance of the economy has slowed down considerably. The investment rate has fallen from 35.2% six years ago to around 27% now. There is a significant decline in the investment rate. If the economy needs to grow, the investment rate is one of the important factors. We need to address the issue.”

In a few remarks that Rangarajan made in the past, he claimed that the government could increase its expenditure as one of the measures to boost the economy. He said that the Goods and Services Tax (GST) was not providing “enough revenue” as projected earlier.

He also added that disinvestment can help in providing funds to the government to a certain extent.

Also Read: ‘Instead Of Building Gigantic Statues, India Should Build More Modern Schools, Universities’: Former RBI Governor Raghuram Rajan