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India's target of $5 trillion economy an unrealistic goal

Issac John /Dubai
issacjohn@khaleejtimes.com Filed on December 25, 2019 | Last updated on December 25, 2019 at 05.39 am
GDP, $5 trillion economy, IMF, Gita Gopinath, Raghuram Rajan

(alamy.com/ae)

India aims to achieve the target by 2025.

India's much vaunted goal of becoming a $5 trillion economy by 2025 is likely to remain an unrealistic target given the dismal economic data of the past few quarters and the doubts and concerns voiced by ratings agencies and economists on the medium-term outlook.

International Monetary Fund's chief economist Gita Gopinath is among the most prominent economists to sound the alarm, arguing that Asia's third largest economy would have to grow at 10.5 per cent in nominal terms as against six per cent in the last six years, and 8-9 per cent in real terms in order to achieve the target.

The IMF in its October forecast had projected 6.1 per cent growth for India in 2019 and the same to go up to 7 per cent in 2020.

Gopinath warned that the fiscal situation in India is "challenging" and the country will certainly breach the 3.4 per cent deficit target.

Former RBI governor Raghuram Rajan, who is a Professor of Finance at the University of Chicago Booth School of Business, said repeated government "allusions to a $5 trillion economy by 2024, which would necessitate steady real growth of at least 8-9 per cent per year starting now, seem increasingly unrealistic."

issacjohn@khaleejtimes.com

author

Issac John

Editorial Director of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.


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