Can INDIA Become The Country With $5 Trillion Economy

A few days ago Prime Minister Narendra Modi declared that he wanted India to be a “$5 trillion economy” by 2024 when he once again faces reelection. This would, he said, be “challenging, but achievable.” A day after Union Minister Nirmala Sitharaman presented Budget 2019, PM Narendra Modi painted a picture of how India will become $ 5 trillion economies.

What does it mean for the country like India to become a $5-trillion economy 

 

If Indias grows rate at 12% nominal growth (that is 8% real GDP growth rate and 4% inflation rate), then from 2018 the level of $2.7 trillion, that India would reach the 5.33 trillion mark in 2024.

 

In the current scenario, India is the 6th largest economy in the world but it does not mean that Indians the 6th richest people in the world.

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The GDP is the first and most rudimentary way to keep score among economies. If one wants to better understand the wellbeing of the people in an economy, one should look at GDP per capita.

In terms of overall GDP, this data shows that India is very close to overtaking the United Kingdom. It also shows that Indonesia’s GDP is almost one-third of India’s.

GDP DATA

Meaning of $5 trillion economy

 

The size of the India economy is currently around Rs 190 lakh crore (GDP at current market prices, 2018-19) which comes out to be $2.8 trillion, converting it in dollar terms taking average exchange rate of the financial year. This means the Indian economy needs to almost double its size in the next five years to realize the target of reaching the $5 trillion mark.

Does it possible to change GDP per capita, when India hits the $5-trillion mark?

 

If by 2024 India’s GDP is $5.33 trillion and India’s population is 1.43 billion (according to UN population projection), India’s per capita GDP would be $3,727. While this would be considerably more than what it is today, it will be lower than Indonesia’s GDP per capita in 2018.

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Does it possible to achieve the target of a $5 trillion economy by 2024?

 

"Inflation rate in India is just above 3 percent and even global inflation is not very high. The outlook for inflation also looks largely benign and even the global inflation rate has not shown signs of prices going up. This is going to aid India's GDP growth to achieve the $5 trillion target, which is not at all unrealistic until rupee doesn't start depreciating," said Sujan Hajra, Executive Director and Chief Economist, Anand Rathi Securities.

India witnessed a dip in its real GDP growth in rupee terms during 2018-19, as the economy grew by just 6.8 percent as compared to 7.2 percent in the previous fiscal.

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The International Monetary Fund (IMF) in April 2019 had cut its India's GDP growth forecast for 2019-20 by 20 basis points to 7.3 percent in 2019-20 and 7.5 percent in 2020-21.

Downward revision by IMF was followed by a similar action taken by the Asian Development Bank (ADB) and the Reserve Bank of India (RBI) as well. ADB has forecast India's GDP growth to be 7.2 percent, a downward revision from 7.6 percent earlier. While India's Monetary Policy Committee of RBI has recently lowered its GDP forecast for 2019-20 to 7 percent from earlier 7.2 percent.

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Even if India's real GDP grows as per the predicted growth rate of around 7.5 percent in rupee terms for the next five years, it can easily cross the $5 trillion mark by 2024.

"The target of $5 trillion is in nominal GDP terms, a 7-7.5 percent of real GDP growth and an average inflation rate of around 4-4.5 percent translated into a nominal growth of 11.5 percent, a ballpark calculation," said Sujan Hajra.

How will GDP per capita effectively change when India hits the $5-trillion economy mark?

 

If by 2024 India’s GDP is $5.33 trillion and India’s population is 1.43 billion (according to UN population projection), India’s per capita GDP would be $3,727. While this would be considerably more than what it is today, it will be lower than Indonesia’s GDP per capita in 2018.

Conclusion 

 

Friends pls don't forget what Prime Minister Modi promised in the time of Demonetisation and what promise he will make about cashless economy, actually if you look on the promise made by Indian Prime Minister Mr. Narendra Modi from the year 2014 to till now he will fail to fulfill his every promised he made from the day he becomes prime minister of India. And as per his record, this $5 trillion economy is also nothing else but a fake promise.