CHASING FIVE TRILLION DOLLAR ECONOMY AND BEYOND

 The quest for India becoming a $5 trillion economy  and beyond has  been the major point of discussion among policy makers and development experts in recent years which gained further momentum and extended  even beyond $ 10 trillion after Prime Minister  observed about the possibility of India becoming one among the three major economies of  the  world. Government of India's Press Information Bureau on 11th October 2018 released Vision of US $5 trillion economy for India assuming that India has been one of the fastest growing major economyof the globe ranked then as the world's 6th largest economy .Analysis showed that projections for growth over medium term remains largely encouraging and optimistic to the country. India has got potential to achieve a US $5 trillion economy by 2025.But Covid19 and other global headwinds seems to have caused some set back in achieving the targeted  $5 trillion  by 2025 instead it has been shifted to posssibly by 2027-28.According to IMF's World Economic Outlook the size of Indian economy will increase from $ 3.2 trillion in 2021-22 to $3.5 trillion in 2022-23 and cross $5 trillion in 2026-27. State Bank of India economists team have 2027-€predicted India to achieve $5 trillion economy status by 2027-28 at constant prices. 

As per nominal GDP  estimate or aggregate value of goods and services produced within the country in a year, Indian economy with 3.39 $trillion in 2022 at current prices ranked the 5th position in the world ,whereas as per real GDP or  at constant prices Indian economy with $3 trillion ranked the 6th position .GDP estimate at constant prices  indicated that USA holds first position ($21trillion) followed by China $ 16.3 trillion,Japan $4.5 trillion].Germany $3.6 trillion UK$3.2 trillion followed by India ranked at 6 th position with $ 3 trillion. Quite interestingly  as per the estimate based on purchasing power parity or in terms of purchasing parities estimated through  the price survey of a common basket of commodities across countries estimates have shown that Indian economy ppp GDP reached $10 trillion in 2022,as against countries like China  ranked first with $ 25.1trillion followed by USA $21.6 trillion. India secured the 3rd position with $10.1 trillion,   Japan 4th position $ 5.2 trillion and Germany 5th position with a ppp $4.5 trillion. 

Given the variation in accounting of the  GDP estimated in terms of current or market prices ,constant or real prices, and estimates based on purchasing power parity across the countries generally analysts are mostly following estimates at constant or real prices. Our policy road map to achieve a $5 trillion economy comprised of the  measures focused on technology driven approach to economic development, inclusive growth, promoting digital economy, financial technology, energy transition and climate action and  exclusive dependence on virtuous cycles of investment and growth. Major reforms rolled out in this direction include implementation of Goods and services Tax (GST),Insolvency and Bankruptcy Code (IBC),significant reduction in corporate tax rate,Making in India,Atmanirbhar Bharat Mission, Start ups India strategies and Production Linked Incentive (PLI) scheme etc. Union Budget 2023-24 has taken further action to sustain the high growth of the Indian economy which include substantial increase in capital investment outlay for the second year in a row by 33% to rupees 10 lakhs (3.3 % of GDP),The  capital expenditure led growth strategy has to support both economic growth and investment simultaneously,both the Government and private sector increased capital investment  substantially.  

Nominal GDP estimates of India showed the value of economy at $3.39 trillion in 2022 ranked at 5th position at the global level as against real GDP estimated at $ 3 trillion and ranked 6th across the world.Assuming  that there is no much changes in the external sector the Moody's has raised India's GDP growth forecast to 6.7% in 2023.Recent estimates showed that India's GDP grew by 7.8% in the first quarter of Financial year 2023-24 compared with drastic 13.1% in the same period last year 2022-23. Gross Value Added was highest in this quarter compared to the last four quarters.Given the global scenario it was a services sector led growth with 10.3 % (16.3% in 2022-23 q1) industry with 3.5 % as against 9.4% last year and important rate of growth achieved in the agriculture sector at 3.5 % in Q1 of 2023-24 as against only 2.4 in corresponding period last year According to Fiscal policy statement February 2023 while the nominal GDP is projected to change from 19.5% in 2021-22 to 15.4% in 2022-23, the real GDP is projected to change from 8.7 % in 2021-22 to 7% in 2022-23. The latest estimates of 7.8% in the first quarter of April - June 2023 indicating that 6.5% will be to full year growth rate. The expansion of GDP is driven by impetus in the service sector, heightened consumption expenditure and impetus in infrastructure development. 

According to Chief Economic Advisor more supply side economic reforms is on the pipeline and it would turn Indian economy to the 3rd global position by the turn of this decade. By 2030 our per capita income is projected to increase to $4400.But the real problem of absolute poverty  and unemployment needs to be effectively tackled.He has  observed that over 100 million crossed poverty.  Hwever instead of setting aside the research reports and researchers about poverty unemployment and other social deprivation,  Policy makers should boldly address such issues effectively. Assuming a reasonable external demand and prevailing relatively vibrant macro economic conditions achieving $ 5 trillion economy within five years is very much possible  and  beyond that the country is  also bound to achieve the rank of third largest economy in the world in future as well.