India's $5 trillion economy goal by FY25 is at risk
For a significant portion of next year, India's GDP will be less than it was in 2019. Due to the delay induced by the COVID-19 epidemic, it is extremely improbable that India would become a USD 5 trillion economy by 2024-25, according to University of Massachusetts professor Vamsi Vakulabharanam. Furthermore, the Indian economy would be smaller for a significant portion of next year compared to its size in 2019, according to Vakulabharanam in an interview with PTI. While Covid-19 is undoubtedly the most important reason in the economic downturn, Vakulabharanam points out that India's drop is considerably more pronounced than that of other developing nations and the world economy in the past year. "The present GDP of India is less than USD 3 trillion. If it wants to reach USD 5 trillion in four years, the economy must expand at a rate of more than 13% per year on average "he stated By 2024-25, Prime Minister Narendra Modi hoped to transform India into a USD 5 trillion economy and worldwide powerhouse. "Even under the best-case scenario, this is very implausible," said Vakulabharanam, co-director of the University of Massachusetts Amherst's Asian Political Economy Program. Even if everything goes according to the RBI and IMF's current growth predictions, he believes the Indian economy would be smaller for a significant portion of next year than it was in 2019. The IMF and the RBI both recently lowered their growth forecasts. According to the latest CSO estimate, the GDP shrank by 7.3 percent last year, and the RBI predicts that it will expand by 9.5 percent this year. When asked what economic measures are needed to help distressed households, he stated they have two basic needs: minimal sustenance and access to health care. "In the aftermath of the Indian economy's extraordinary crisis, the government should have taken severe measures to assist impoverished households on both counts," Vakulabharanam added. In response to concerns about rising inflation, he stated that the present higher level of inflation is not a cause for concern for the economy. "Since much of the inflation comes from supply slowdowns and reduced capacity utilisation, the government's major priority should be raising aggregate demand," he said, adding that if this leads to a spike in inflation in the near run, the government should not be concerned.