Can Economy Really Grow To $5 Trillion By 2025?

Despite an all-too-obvious slowdown, most respondents believe the economy is doing better than earlier and are confident it can grow to the government-projected $5 trillion by 2025

- Shwweta Punj & M.G. Arun

There is little doubt the Indian economy is in distress. Nearly all major economic indicators underline the concern. Take, for instance, the slowdown in the Rs 8.3 lakh crore automotive sector, widely regarded as a bellwether industry. Auto sales (across all categories) have slumped to a nearly two-decade low. The downturn in this sector, which directly or indirectly employs around 32 million, is evident from the closure of over 300 dealerships of various automakers across the country. Companies such as Ashok Leyland and Tata Motors are closing factories to prevent a build-up of inventory. Maruti Suzuki, meanwhile, is terminating temporary workers as sales drop.

India’s factory output growth rate, as measured by the Index of Industrial Production, slowed to two per cent in June 2019, down from seven per cent in June 2018. The slowdown is clearly visible across multiple industrial sectors—for instance, the manufacturing sector’s growth rate slid to 1.2 per cent in June 2019, falling from 6.9 per cent in June 2018, while the mining sector grew at a tepid 1.6 per cent, a sharp fall from 6.5 per cent in June 2018. Crisil, a ratings agency, recently scaled down India’s GDP growth projection for the current fiscal to 6.9 per cent from the 7.1 per cent it had projected earlier.

Even agriculture, a sector that is still the largest employment generator in the informal economy, continues to be in distress. For 2018-19, growth in agriculture and allied activities was estimated at 2.7 per cent, down from five per cent in 2017-18.