5 Trillion Economy: Financial Perspective

 Prime Minister Modi had announced an ambitious target of a $5 trillion economy for India by 2024. If achieved, India will become the third-largest economy in the world. The focus is on boosting services sector contribution to $ 3 trillion, manufacturing to $ 1 trillion, and Agriculture to $ 1 trillion. However, the recent economic slowdown has made critics question the ambitious target. While delivering his 6th consecutive Independence Day speech from the ramparts of Red Fort, Hon’ble Prime Minister of India, Shri Narendra Modi Ji, On 15th August 2019, expressed confidence that India would be a $5-trillion economy in 2024. More recently, while addressing a gathering of leaders from the Corporate World, Diplomats, and others, at the centenary meet of ASSOCHAM in New Delhi on 20.12.2019, the Prime Minister said that the idea of making India a 5 Trillion Dollar worth economy is not a sudden one. “In the past five years the country had made itself so strong that it not only could set for itself such a target but also make efforts in that direction,” he said. While speaking on this occasion he also listed out the allegations that were hurled at his team, but he is committed towards a new India. Earlier, in July 2019, the Economic Survey laid out a blueprint for $5 Trillion Indian economies.

The Economic Survey 2019​ presented by Chief Economic Adviser (CEA) Krishnamurthy Subramanian focusses on moving to a“virtuous cycle” of savings, investments, and exports to transform India into a $5 trillion economy in the next five years. Though the Vision is laudable, the growth figures do not excite me a lot. India’s economy expanded by just 4.7% between July and September, it’s a seventh consecutive quarter of slowing growth. The country’s GDP was growing by more than 9 percent at the start of 2016, and by 8.1 percent as recently as early 2018. Further, the number of agencies revising India’s growth estimate is increasing, with the latest being the International Monetary Fund (IMF). Most recently, The International Monetary Fund cut its estimate for India’s growth this year to 4.8% from an earlier projection of 6.1% which was also revised from the earlier 7% projected in July, calling on the country to use monetary policy and broad-based structural reforms to address cyclical weakness and strengthen confidence. Citing a sharper-than-expected slowdown in local demand and stress in the NBFC sector, the agency in its latest World Economic Outlook said, “The growth markdown largely reflects a downward revision to India’s projection, where domestic demand has slowed more sharply than expected amid stress in the non-bank financial sector and a decline in credit growth.”

The​ Government is working hard to realize Prime Minister Narendra Modi’s dream of making the country a five trillion-dollar economy by 2024 and has taken steps to overcome the phase of economic slowdown. The nation is witnessing a new sense of dynamism and several initiatives are being taken in line with Modi’s vision of ‘New India’. Principal Secretary to Prime Minister Pramod Kumar Misra recently said that while several fundamental and path-breaking reforms have been undertaken in the form of Insolvency and Bankruptcy Code and GST, continuous opening up and liberalization of FDI have resulted in unprecedented inflows of FDI into the country. On December 13, Finance Ministry unveiled a detailed presentation on steps taken to boost the economy. Chief Economic Advisor Krishnamurthy Subramanian said the government is focusing on increasing consumption to boost economic growth. Presenting steps taken by the government in the past few months to pull the economy out from a six-year low growth, he said the measures include corporate tax cuts to improve the risk-return of companies.

-Priyadarshini K. (Sri Ramakrishna College of Arts & Science for Women)

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