The Long Road Ahead

The government aims to turn India into a $5-trillion economy in the next five years, but it has to cross several hurdles along the way.

- Ashish Gupta

WITH PRIME MINISTER NARENDRA MODI setting a stiff target of turning India into a $5-trillion economy by FY25, the government has its work clearly cut out. It has to put in place favourable laws, institutions, and policies to create the right ecosystem for the economy to grow from $2.73 trillion in the next five years and convert its mission statement into reality. The first building block of this grand vision was laid out by chief economic adviser Krishnamurthy Subramanian through his “blue sky thinking” in the Economic Survey 2019. Finance minister Nirmala Sitharaman followed by backing the ambitious target with the 2019-20 Union Budget.

Can India attain this target? Some economists might be sceptical, but the government is confident. Drawing inspiration from the investment-led and export-driven economic model of Southeast Asian tiger economies, Subramanian has drawn up a sustained 8% GDP growth model. It is driven by a “virtuous cycle of savings, investments, exports and supported by favourable demographic phase” in which the working age population is higher than others. His model is based on the belief that these favourable demographics will continue for the next two decades, if not more, and thereby help achieve the prime minister’s vision.