5 Trillion Dollar Economy by 2025 - Does That Still Sounds Realistic After Covid-19 Outbreak?
5 TRILLION DOLLAR ECONOMY BY 2025 – DOES THAT STILL SOUNDS REALISTIC AFTER COVID-19 OUTBREAK?
- Joncy Lakhani, Parul Institute of Law, Parul University, Vadodara
Quarantined in the house and trapped by the Covid-19, does PM Modi still address the doubters of the five trillion-dollar economy by 2025 as “professional pessimists[1]”?
IGNORANCE IS NOT A BLISS
Present-day Indian economy is about 2.75 trillion dollar economy and what the PM Modi promised by next 5 years is 5 trillion dollar economy which is almost ‘double’ of what we are having today, it might have sound ambitious that time but, it’s no right to live in the imaginary world for so long and wait for it to happen one fine day by its own, as the bitter reality has befall (Covid-19) and which cannot be overcome and ignored as that of the reality of 22% Poverty[2], Massive Unemployment, Poor Infrastructure, No ground Implementation of Schemes and Policies, and it counts on.., with this preceding ignored realities we would have still reach near the goal of around 5 trillion dollar with the proper implementation of plans and strategies but, right now it completely sounds like Jumla (unrealistic) after the occurrence of this unwanted virus named Covid-19[3].
ARITHMETIC CALCULATION
Apart from recent lockdown even if we look at the earlier situation, what is unfortunate is that there is slight effort to take it beyond a slogan. It is not new to have politicians trying to galvanize people around slogans and hoardings. However, when it comes to goals and targets belonging to economy, it is required to have the politicians and advertisers go beyond the headline, to disburse the details and the road map for the goal. The Rajya Sabha member P. Chidambram[4] showed the clear calculations where he insisted upon to forget about the granular indicators, such as annual growth, inflation rate, employment rate, and other things so that the actual policy can be drafted. He made the calculations like this: back in 2018-2019, India’s GDP was $ 2.75 trillion, and India’s current growth rate happens to be 4.5%. He further says that “we all hope that this disappointing performance will be short-lived but for the clear and realistic calculations, let us ask how many years it would take to reach the target by this growth rate”. Undoubtedly, the GDP will rise to $2.87 trillion in 2019-2020, which is $2.75 trillion in addition to 4.5% of 2.75. going on with the same arithmetic calculation, the goal is clearly achievable in 2032-33, not in 2025. In order to achieve this target by 2025, the economy should grow at the rate of 10.5% for the 5 consecutive years than and only this miracle can happen but again if we come back to the data, China’s economy is the only one which had grown at 10.5% growth rate for six consecutive years i.e. from 2003-2009[5]
INDIA’s ANALOGY TO CHINA
China with the population of 150 crores ranks 2nd in the greatest economies list after America being the 1st largest with $19 trillion and china being $12 trillion. India being the second most populated country with 135 crores of people ranks 4th in the list after Japan with $5 trillion and India being $2.75 trillion. Now we can see so many similarities in both the economy (India and China) but the number in dollar trillion would have pinched you Right? Definitely it should! It’s not since ever the china had best economy, this height is being reached in only 5 consecutive years. This miracle happened with the techniques such as worldwide trade, outbound investment, and foreign exchange reserves and bulk production. China being the most populated country has a cheap labour force and thereby it used their cheap labour force in bulk productivity of items (each and every kind of). They produce the products ranging from teeny toy-battery to enormous production machines and exports them worldwide at low costs, attractive appearance and useful items. India also have the cheap labour force being second most populated country but what lacks is proper planning and strategy formulation and when the proper strategy is formulated, what India lacks is implementation on ground level, where it is most needed, but the corruption is the weakness of the corrupt officials from which they cannot resist from. Henceforth, India is still holding the 5th position.
WILL COVID-19 PAVE THE WAY FOR $5 TRILLION ECONOMY?
The pandemic covid-19 is an unprecedented human and economic catastrophe which is likely to pave the way for significant dislocations for businesses and consumers which will put the world in difficult situation to predict the future, if the post-covid19 recovery will be ‘V’ shaped i.e. speedy recovery after a severe downfall or the ‘U’ shaped i.e. protracted recession before recovery. If the virus once after disappearing does not reappears, the bottled-up demand of the investment and consumption may support in a fast recovery. However, many economists still doubt that even after once the lockdowns are over, all the monetary activities will remain closed until and unless there is the vaccine of covid-19 available worldwide, and which is unpredictable as by when this vaccine maybe generated.
It’s not that after the Covid-19 the Indian economy is facing reduced GDP growth which is expected to reduce to 2% or lower in this pandemic stage, but India’s GDP was not even growing before this pandemic, it was going through the near 4% annual growth rate and as for the dream of $5 trillion India needs at least 10.5%[6] of annual growth rate which seems to be impossible now as India has not seen double numbered GDP growth since ages and we cannot at all expect it to go double numbered in this financial and health crisis.
A $5 TRILLION ECONOMY IS LIKE A DREAM TO COME TRUE FOR A HIPPO TO ENJOY OUTSIDE HIS MUD PUDDLE.
“India pretty much relates to the tortoise story in the fable[7], the potential was never in question, what tortoise needed is time and what India requires to reach 5 trillion-dollar economy is also a time. To have ache din (good days) and prosperity among the billion Indians, the increase in the rate of growth of GDP is must and for that inflation has to be overcome and demand has to be raised and moreover investment and consumption should be considerable. And after this lock down it would be the best time for India to raise the demands and implement the long term policies which India was waiting since long for an opportunity to increase its GDP, the infrastructure building should also be increased as it will give the employment to the workers who are at large unemployment right now.
The Policies and programs laid out by India such as Startup India[8], Make in India[9] and many more in progress will result in the growth of India’s GDP to some extent so the government should focus on and give incentives to the people to work on this schemes and make it successful in real terms to increase the India’s prosperity. With these platforms the Infrastructure of India has a great scope to be developed and thereby thousands of the people will get the jobs and which will increase their per capita income and increase in that will lead to increase in GDP. India being a developing country has a good scope of prospering with correct steps and measures.
References :-
[1] https://indianexpress.com/article/opinion/columns/india-5-trillion-dollar-economy-gdp-rupee-6272931/
[2] Downtoearth.org.in
[3] Who.int
[4] https://m.economictimes.com/news/economy/indicators/indias-aim-of-being-a-5-trillion-economy-challenging-but-realisable-nirmala-sitharaman/articleshow/71621262.cms
[5] Indianexpress.com
[6] https://indianexpress.com/article/opinion/columns/india-5-trillion-dollar-economy-gdp-rupee-6272931/
[7] https://www.outlookindia.com/magazine/story/business-news-opinion-a-5-trillion-dollar-economy-is-like-a-chubby-cow-learning-to-skate-on-thin-ice/302551
[8] Startupindia.gov.in
[9] Makeinindia.com
