Lagatar24 Desk
New Delhi, Oct.8: Former Reserve Bank Governor C Rangarajan said on Friday that becoming a $5 trillion economy by 2025 is unrealistic under the existing circumstances and that the country needs to develop at 9% per year for the next five years to do so.
Speaking at the ICFAI Foundation for Higher Education’s 11th Convocation, he said that if a third wave of Covid-19 occurs, efforts should be made to mitigate the negative effects, and that both vaccination coverage and the pace of investment in health infrastructure should be accelerated as part of the overall infrastructure investment strategy.
“A few years ago, there was the hope that India would become a USD five trillion strong economy by 2025. That has become impossible. India’s economy was USD 2.7 trillion strong in 2019. At the end of March 22, we will still be at the same level. To go from USD 2.7 trillion to USD 5 trillion, the economy has to grow at 9 per cent for five consecutive years,” he said.
According to him, growth, which is the remedy to many social problems, should therefore become the government’s undivided priority, while fairness, which is as vital, would remain a distant dream until it is supported by high growth pushed by reforms.
He believes that if revenues grow, spending can be raised, and that there is no need to decrease the fiscal deficit below the budgeted level of 6.8% of GDP and that fiscal consolidation can begin the following fiscal year. India does, in fact, require a greater rate of growth to compensate for the output loss in the previous two years compared to the trend rate, and must create the groundwork for faster growth this year, according to the economist.
He claimed that due to the lockdown implemented to prevent the spread of COCID-19, economic activity had come to a standstill, with India’s GDP falling by 7.3 percent in 2021, the United States by 3.5 percent, France by 8.1 percent, and the United Kingdom by 9.8 percent.
The economy has only begun to improve since the lockdown limitations were lifted, according to the former Chairman of the Prime Minister’s Economic Advisory Council.
“While the economic impact of the first wave was severe, the health impact of the second wave was serious. The contraction of the economy has hit hard the daily wage earners and migrant labour. Life Versus Livelihood has emerged as a serious issue,” he said.
