Prime Minister Narendra Modi’s vision of making India a $5-trillion economy and a global economic powerhouse by 2024-25 is “challenging” but “realisable”, Finance Minister Nirmala Sitharaman has said, underlining that more reforms are on the anvil before the end of the fiscal year.
Delivering a lecture on ‘Indian Economy : Challenges and Prospects’ at the Columbia University’s School of International and Public Affairs on Tuesday, Sitharaman said the Indian economy has been on a growth trajectory ever since the Modi government came to power in 2014.
“In 2014, when the National Democratic Alliance (NDA) was voted to power, India was a $1.7- trillion economy. In 2019, India has become a $2.7 trillion economy. Our vision to become a $5-trillion dollar economy by 2024-25 is challenging, but is realisable, Sitharaman said.
The lecture was organised by the University’s Deepak and Neera Raj Center of Indian Economic Policies.
“To become a $5-trillion economy, India’s GDP needs to go faster than what we grew at an average of 7.5 per cent in the last five years. That’s a matter of fact statement. Inflation needs to be at 4 per cent to ensure commensurate increase in purchasing power, she said, adding that inflation in the last five years was 4.5 per cent and has been on a declining path to reach 3.4 per cent in 2018-19.
Fixed investments
She stressed that fixed investment rate needs to increase from 29 per cent to 36 per cent in the course of the next five years, with some depreciation of the rupee.
“Our ambition to become economically strong has been driven more by our desire to become a less poorer nation,” she said.
Sitharaman said in July when she presented the first Budget of the second term of the Modi government, India’s GDP had decelerated in four consecutive quarters.
“Yet we projected the GDP to grow at 7 per cent in 2019-20, slightly higher than the 6.8 per cent realised in 2018-19. Even when our GDP decelerated in the fifth successive quarter, we did not revise downwards our projections as some institutions around the world have already done,” she said.
She said India has just entered the second half of fiscal year 2019-20 and already implemented a series of reforms, with more on the anvil before the close of the year.
A critical component of our mission is high levels of investment, driven by the private sector, a larger presence in the global markets, and a lower level of public debt, she said.
India, US trade talks
Trade negotiations between India and the US are going well and will conclude sooner than expected, Sitharaman said.
Last month, India and the US failed to announce a limited trade deal in New York during the meeting of Prime Minister Narendra Modi and President Donald Trump, due to differences over the package including Washington’s demand for access to Indian markets for medical devices, such as stents and knee implants, information and communications technology (ICT) products and dairy products with the removal of price caps.
India is keen on a fair and reasonable trade deal in which its request for market access is secured while also addressing the trade deficit issue raised by the US.