How India can achieve its $5 trillion economy dream by 2025
The Economic Survey 2019 recommended the government to sustain a real GDP growth of 8 per cent to make India a $5 trillion economy by 2025.
The Economic Survey 2018-19 tabled in both houses of the Parliament by Finance Minister Nirmala Sitharaman today reveals how the Indian economy did in the past one year—and what it should do to sustain its growth.
Guided by the dictum of “blue sky thinking”, the survey said that India needs to sustain a real GDP growth rate of 8 per cent in order to achieve the objective of becoming a US$5 trillion economy by 2024-25.
“International experience, especially from high-growth East Asian economies, suggests that such growth can only be sustained by a “virtuous cycle” of savings, investment and exports catalysed and supported by a favourable demographic phase,” the report said.
Bringing private investment in the infrastructure sector is key to achieving this target since fiscal constraints are preventing increase in fund-flow from public sector, the report said.
Investment drives demand, creates capacity, increases labour productivity, introduces new technology, allows creative destruction and generates jobs.
“For a smooth and fast travelling, India needs adequate and timely investment in quality infrastructure. In order to create a ten trillion dollar economy by 2032, India needs a robust and resilient infrastructure. Public investment cannot fund the entire infrastructure investment requirements of the country,” the survey read.
India needs to spend 7-8 per cent of its GDP on infrastructure annually. According to the current figures, this amounts to US$200 billion.
However, the country has been able to spend only about US$100-110 billion annually on infrastructure. That is the gap India needs to fill: a deficit of around US$90 billion per annum.
By presenting data as a public good, emphasising legal reform, ensuring policy consistency, and encouraging behaviour change using principles of behavioural economics, the Survey aims to enable a self-sustaining virtuous cycle.