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India’s Target of $5 Trillion Dollar Economy and Viksit Bharat 2047

India’s Target of $5 Trillion Dollar Economy and Viksit Bharat 2047

Post 2024 general election, and the budget around the corner of NDA government, India is hearing the buzz words such as ‘Budget’; ‘Capex’; ‘Tax’; ‘Gross Domestic Product (GDP)’, and the list goes on.

Few years ago, the Government of India announced its target of becoming a $ 5 trillion dollar economy. Starting with basics, when one says economy worth of certain amount, it is pointing out towards the national income which is measured in multiple ways. One of the popularly used measure is the Gross Domestic Product or GDP. So, when India will become a $ 5 trillion dollar economy, what is meant is India’s GDP will become worth $ 5 trillion dollar.

Now, the trillion-dollar question is BY WHEN?

This article intends to answer this question by estimating the future GDP based on various rates of growth. The predictions go on to 2047-48, as proposed by the government that India should work for becoming a ‘Viksit Bharat’, that is, a developed nation by this time.

The future projections are calculated on the basis of GDP data collected from MoSPI and the RBI for the duration starting from 2011-12 to 2022-23. There are two parts of this estimates, one GDP at Current Prices and GDP at Constant Prices. In simple terms, the difference between the two lies with respect to inflation, the former includes present-day prices as the name suggests hence includes inflation; the latter is adjusted for prices, also, known as Real GDP. While marking the difference between the two, the estimates are calculated separately.

First, let’s have a look at the actual GDP of India from 2011-12 to 2022-23 based on which forecasting has been undertaken.

Evidently, as discussed, the graph shows the difference that GDP at Current Prices is more in amount compared to the GDP at Constant Prices. The Compound Annual Growth Rate for the same duration of Current Prices was 10.45% and that of Constant Prices was just the half, 5.50%.

Now, we move to the projections and figure out when will India be the $ 5 trillion dollar economy.

Firstly, we have used the CAGR of GDP at current and constant prices to estimate the future amount of GDP.

If Indian economy grows at 10.45%, then it will become a $ 5 trillion dollar economy in next few years that is by, 2029-30. The same target will be achieved in the year 2044-45, if the Indian economy grows at the rate of CAGR of 5.50% of GDP of Constant Prices.

Additionally, we have projected India’s GDP using different rates of growth, namely at 2%; at 4%; at 6%; at 8%, and at 10% to understand the range of growth and various levels of GDP associated with each.

If the Indian economy grows at 2%, it is likely to not achieve the target of $ 5 trillion dollar even by 2047-48. If it grows by 4% then by 2038-39 India would have reached the goal. If the economy grows at 6%; 8%; and 10% then the economy will become 2033-34; 2031-32; and 2029-30 respectively.

With growth rate of 2% and 4% of GDP at Constant Prices, India will not attain its target in the given duration. With growth rate of 10%, the Indian economy will become a $ 5 trillion dollar economy by 2034-35 and with 8% and 6% by the years 2037-38 and 2040-41 respectively.

Recently, in April 2024, the International Monetary Fund (IMF) forecasted that Indian economy shall grow at 6.8% in the upcoming year of 2024-25.

If we take into consideration, GDP at Current Prices and its CAGR, then the target is not far for the economy. Even if it grows between the range of 6% to 10% still the goal can be attained before 2035.

The goal looks tougher when we look at GDP at Constant Prices and achieving the target with its CAGR. The year, 2035, by which three different growth rates would have achieved the target at Current Prices, in terms of Constant Prices, only 10% growth rate will make up to that level in the given time.

However, unless another pandemic-like situation arises, the Indian economy is certainly likely to propel forward at higher growth rates compared to the rest of the world.

The GDP of India though growing and demonstrating appositive picture of growth and development should be taken with a pinch of salt. The trickling down effects of GDP growth rate is subject to multiple kinds of arguments and positive and negative interpretations. In such scenario, per capita income proves to be an appropriate indicator. The GDP projection exercise is undertaken to gauge the attainable year and accordingly to achieve the target, policies to be formulated.

Vaibhavi Pingale

Ms. Vaibhavi Pingale is a Visiting Faculty of Economics at Gokhale Institute of Politics and Economics, Pune & at Savitribai Phule Pune University. She is pursuing her PhD. She has been actively writing media articles other than academic research.

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