Bengaluru: Bibek Debroy, Chairman of the Prime Minister’s Economic Advisory Council, said the vision of making India a $5 trillion economy will be delayed by two to three years due to the loss of development trajectory during the Covid-19 pandemic.
“When this target was first announced, the exogenous shock because of Covid was not foreseen by anyone. But compared to many other so-called advanced countries, India has managed the onslaught of Covid pretty well. Whether it is in terms of mortality rates or in terms of vaccinations. Having said this, effectively what Covid did was for us to lose two years.
“We lost two years in our development trajectory. We lost two years in trying to get towards the sustainable development goal targets which India is scheduled to achieve and the rest of the world is scheduled to achieve by 2030.
“So, quite obviously, the 5 trillion target in 2024-25 is now impossible. The chief economic advisor has recently said and so has the IMF that it might be possible by 2026-27,” Debroy told the 45th Annual General Meeting of the Bangalore Chamber of Industry and Commerce (BCIC).
The video of this chat between Debroy and BCIC members was released here on Tuesday.
Whether it is two or three years of delay does not matter, he said. India will achieve the target down the line, but India needs a growth rate of 8-8.5 percent, Debroy said.
However, it will not be possible for India to achieve a maximum of 8.5 percent growth rate in next two to three years, considering the factors such as global downturn, geopolitical tensions and commodity price hikes, he said.
India will be able to achieve a maximum of 7.5 percent growth rate, which is quite respectable compared to the prevailing conditions in several countries, Debroy said.
Despite all these odds, India can still achieve 8.5 percent growth rate, provided some of the states begin to grow faster, he said. “This is one way of slicing it up to achieve the target.”
“The second way to slice it is to say what we should be doing about the primary, secondary and tertiary sector and the third way to slice it up is to simulate the components of national income, consumption, investment, government expenditure and exports,” Debroy said.
“Exports are not going to do very well because the global market is uncertain,” he added.
The last way to slice it up is to bring in reforms needed in land, labour and capital markets, Debroy said.
The Indian economy is estimated to grow at 9.2 per cent during the current fiscal and at 8-8.5 per cent for the next financial year.