Even as the economy continues to see a decline, Prime Minister Narendra Modi's ambitious $5 trillion economy target may not be achieved, said former RBI Governor C Rangarajan. The economy is seeing a steady decline with the rate of growth falling to 6.8 per cent in FY19 as against 8.2 per cent in FY16, news agency PTI reported citing Rangarajan as saying at an event on Thursday. "Today our economy is about USD 2.7 trillion and we are talking about doubling this over the next five years at USD 5 trillion. The required rate of growth to achieve that level is in excess of 9 percent per annum. Reaching USD 5 trillion by 2025 is simply out of question," Rangarajan said.
In the first quarter of the ongoing fiscal, the GDP grew at a dismal rate of 5 per cent on account of both domestic and global factors. Even for the second quarter, different agencies have reduced the projections below 5 per cent, painting a more gloomy picture of the economy. The RBI has also lowered its growth full-year forecast by a full 9o bps in two months to 6.1 percent in its October policy review.
"You have lost two years. This year it is going to be under-6 percent growth and next year it may be about 7 percent. Thereafter the economy may pick up," Rangarajan said. The experts believe that for India, currently a $2.8 trillion economy, to reach the $5 trillion mark by 2024, a nominal growth of over 12 per cent a year is needed in dollar terms. Meanwhile, David Malpass, president, World Bank Group recently said that further economic reforms financial sector and openness and improvements in governance structures are needed to reach a goal of $5 trillion economy target.