Former President of India Dr.A.P.J. Abdul Kalam’s quote of “Small aim is a crime, Have a great aim” is being followed by our current Prime Minister Shri Narendra Modi to the extent possible, I felt.
Narendra Modi has started his 2nd innings aiming India to become $5 trillion economy by 2024. While addressing NITI Aayog’s 5th governing council meet on 15th June, 2019, he brought to light about his vision for India. He added, “The goal to make India a $5 trillion economy by 2024 is challenging, but can surely be achieved”. To move forward towards our desired destination, it’s indispensable to understand where we are standing right now and how to move ahead.
Firstly, how do we assess the size of the economy?
Gross Domestic Product (GDP) is the metric used to measure size of economy. The terms “Nominal GDP” and “Real GDP” may blur your vision in understanding the concept. Nominal GDP is measured at current prices which includes inflation element, whereas Real GDP considers prices of a particular year, which is usually termed as base year, making inflation scope less to effect the size.
To make it clear, $5 trillion target is all about Nominal GDP.
Now, let’s turn back to look into past Nominal GDP figures of India. India made GDP of $2.8 trillion in FY 2018-19, which is a little more than half of the desired GDP by 2024. This implies, we need to make double of our present GDP to successfully launch at the target.
Which element helps India to achieve double the present GDP by 2024?
Growth Rate…….!!!!! The rate at which GDP is increasing, should be really high in order to achieve the target. I’ll justify this statement with the below image.
The above figures make us realize that, India has achieved 8% growth rate on an average for the past 5 years and to start moving forth towards $5 trillion economy, 11.5 % growth rate is required on nominal basis. Speaking in real terms, Growth rate in March’19 quarter falls below 6% to 5.8% making annual GDP growth rate slip to 6.8% from 7.2% last year. This Annual growth rate is lower of past 5 years mainly due to under performance of Agriculture and Manufacturing sectors.
The concerned annual real GDP growth rate to achieve the destined mark would be 8% on an average, being sustainable. The recent Economic survey 2019 highlights that growth prospects will improve in FY 20, with GDP registering 7% real growth rate. However, this is below what is required to achieve a $5 trillion economy by 2024-25.
What is Modi 2.0 government’s stand to scale up the growth rate and achieve the desired?
Prime Minister Narendra Modi has sought the cooperation of states in helping India achieve the target of $5 trillion economy suggesting that each state should aim to increase their own economy by 2-2.5% and focus on exports, adding states should recognize their core competence, and work towards raising GDP targets right from the district level.
Recognizing the distress in the farm sector, PM Modi has announced setting up a high-level task force to suggest structural reforms in agriculture. Pointing out that the export sector is an important element in the progress of developing countries, he said both the center and the states should work towards growth in exports, in order to raise per capita incomes. “There is immense untapped export potential in several states, including the north eastern states. A thrust on export promotion at the state level will provide a boost to both income and employment,” he had said during 5th governing council meet of NITI Aayog.
We will look into highlights of Union Budget:
- Between 2014 and 2019, we rejuvenated Centre-state dynamic, cooperative federalism
- Will further simplify procedures and reduce red tape.
- Well within our capacity to reach $5 trillion economy in a few years
- India will become a $3 trillion economy in the current year itself
- One nation, one grid for affordable power availability for states
- Will examine opening up of FDI in aviation and media
- FDI flows in 2018 remained strong at $4.37 billion
- Comprehensive restructuring of National Highways Programme
- Pension to be provided to 3 Crore retail traders under Pradhan Mantri Karmyogi Mandand scheme
- FAME II scheme aims to encourage faster adoption of electric vehicles by right incentives and charging infra
- Rs 10,000 crore has been approved on April 1, 2019 to encourage faster adoption of electric vehicles.
- Govt allocated Rs 350 Cr towards interest subvention for M SMEs for 2019-20
- Govt to soon announce a package for power sector
- Model tenancy law will be finalized and circulated to states
- In second phase of Bharat Mala project, states will be helped to develop roadways.
- Package for power sector tariff and structural reforms to be unveiled soon
Highlights of Economic Survey 2018-19:
- FY20 GDP growth seen at 7% on stable macros
- India needs to grow at 8% per year to be $5 trillion economy by FY25
- Greenshoots of investment activity seem to be taking hold
- General fiscal deficit seen at 5.8% in FY19
- Declining NPAs should help push capex cycle
- Farmers may have produced less in FY19 on fall in food prices
- GDP growth averaged at a high of 7.5% in last five years
- Rural wage growth started increasing since mid-2018
- January-March quarter slowdown partly due to poll-related uncertainty
- Accommodative Monetary policy to help cut real lending rates
- Political stability should push animal spirits of economy
Roadmap for Future:
- Simplification of procedures.
- Incentivizing performance.
- Red-tape reduction.
- Making the best use of technology.
- Accelerating mega programmes and services initiated and delivered so far.
10-point Vision for the decade:
- Achieving a healthy society via Ayushman Bharat, well-nourished women & children, safety of citizens.
- Self-sufficiency and export of food-grains, pulses, oilseeds, fruits and vegetables.
- Blue Economy.
- Water, water management, clean rivers.
- Building physical and social infrastructure.
- Launching Gaganyan, Chandrayan, other Space and Satellite programmes.
- Making Digital India reach every sector of the economy.
- Achieving green Mother Earth and Blue Skies through a pollution-free India.
- Building Team India with Jan Bhagidari: Minimum Government Maximum Governance.
- Emphasis on MSMEs, Start-ups, defence manufacturing, automobiles, electronics, fabs and batteries, and medical devices under Make in India.
Relentlessly running behind the goal is more important than catching the goal abruptly, as you may catch it any day long. I.e. process is more important than the result. The same is the case with Indian economy reaching 5 Trillion by 2024. “The Goal looks very ambitious, challenging, but achievable” and Achieving 5 trillion Economy not just means the country’s revenue figures will be fancy in numbers, We expect changes in the living conditions of citizens in metrics of food for all, accommodation for all, potable drinking water for every house of the country, better sanitation leading to better health, increasing the purchasing power of consumers, integration of all the national highways with state-level highways. Integrating the rivers of the nation, storing and providing water for all the needed sectors, having single electric grid for the nation, spreading hi-speed bandwidth internet communications to all parts of the country, catering with best healthcare facilities for all, increased foreign tourist visitors, increasing the daily productivity of all the sectors and new institutions, large scale infrastructures being setup.
All these require investments and utmost due care by the government to implement the process for materializing. The major pilot to the program is people of the nation, our thirst to grow and the affair with the goal along with hard work will drive the result. Lets’ hope the national ambitions of high growth are fulfilled. That will mean that India has carried out the crucial internal reforms that will allow it to be a productive international player, and to take on the leadership roles that so many people across the world hope that it will.
This vision will enable India to become a global leader to inspire other emerging nations.