Modi govt's $5-trillion GDP target by 2025 'simply out of question': Former RBI Governor C Rangarajan

[vi-va]

Modi govt's $5-trillion GDP target by 2025 'simply out of question': Former RBI Governor C Rangarajan

Former RBI governor C Rangarajan said that if at all the GDP becomes a $5-trillion gorilla, India's per capita income will grow around Rs 2.58 lakh up from the present around Rs 1.29 lakh, leaving us still in the low-middle income country bracket

Soon after assuming office for the second term in May, the Narendra Modi-led government set a target of taking the economy to $5 trillion over the next five years
Stating that the economy is in a bad shape, former Reserve Bank of India (RBI) governor C Rangarajan on Thursday said reaching the $5-trillion Gross Domestic Product (GDP) target by 2025 is "simply out of question" at the current growth rate.
Soon after assuming office for the second term in May, the Narendra Modi-led government set a target of taking the economy to $5 trillion over the next five years. But there have been several clouds over the economy since, leading many to question the maintainability of the target.
Also Read:5 trillion dollar economy of India: A green perspective
"Today our economy is about $2.7 trillion and we are talking about doubling this over the next five years at $5 trillion. The required rate of growth to achieve that level is in excess of 9% per annum. Reaching $5 trillion by 2025 is simply out of question," Rangarajan said.
"You have lost two years. This year it is going to be under-6% growth and next year it may be about 7%. Thereafter, the economy may pick up," he said, addressing a function organised by IBS-ICFAI Business School.
Also Read: Govt's $5 trillion economy will remain a pipe dream if slowdown continues: Manmohan Singh
Rangarajan added if at all the GDP becomes a $5-trillion gorilla, India's per capita income will grow $3,600 (around Rs 2.58 lakh) up from the present $1,800 (around Rs 1.29 lakh), leaving us still in the low-middle income country bracket.
"The definition of a developed country is one whose per capita income is $12,000 (around Rs 8.6 lakh). It will take 22 years for us to reach that level provided we grow at 9% per annum," the former central banker said.
Also Read:PMC Bank case: RBI Governor discusses auction of attached assets with ED, Mumbai police to help depositors

Modi govt's $5-trillion GDP target by 2025 'simply out of question': Former RBI Governor C Rangarajan

Former RBI governor C Rangarajan said that if at all the GDP becomes a $5-trillion gorilla, India's per capita income will grow around Rs 2.58 lakh up from the present around Rs 1.29 lakh, leaving us still in the low-middle income country bracket

www.businesstoday.in

 

[beijingwalker]

IMF’s chief economist: India may not hit pre-Covid growth levels before 2025

By Ruchi Bhatia
Updated: Jan 28, 2021, 08:35 AM IST
IMF’s chief economist Gita Gopinathtells ET Now’s Ruchi Bhatia and Tamanna Inamdar that the Indian economy may not be back to pre-Covid growth levels before 2025 and the pace of recovery will depend on reforms in the upcoming budget. Edited excerpts:

You have warned that delay in vaccine rollout and hesitancy in inoculation could be some of the worries, how big is the downside risk?
This is a concern in almost all countries. You need sufficient uptake and rollout. We are concerned about the variants of the virus also. I would say this is one of the major downside risks. The other downside risk for India is with regard to financial vulnerabilities in the system. Lots of pandemic measures have been put in place in India and everywhere else in the world, given where the financial system was entering this crisis that could be one serious headwind going forward. If there is a rise in non-performing loans as the RBI has projected, there could be an impact on the banks and NBFCS. That could be a big negative effect on the prospects.

What would you say would be the top most priority for the finance minister in the upcoming budget?
The upcoming budget will have to do two things, first it will have to tackle the current crisis, and at the same time keep an eye on the future, by putting in place the necessary reforms needed to accelerate the recovery. If you look at the social sector, there is a good argument to extend some of the pandemic support measures that will provide lifelines to poor households. On the health front, expenditures have been put in now to make sure that the vaccinations roll out at a faster pace. For MSMEs, lifeline were provided mostly in the form of liquidity. It's important to see how well they're working. The banking system is going to see more NPAs. There could be a reason for capital support from the government. The government has to scale up infrastructure spending. And alongside, there has to be a credible path for divestments.

Given the load of NPAs in banks, do you believe a bad bank perhaps is the need of the hour?
The bad bank idea, in general is a good one but it doesn't really help if the bank that you're trying to fix is a public sector bank. So I would say that you need to address the insolvency and the bankruptcy framework. In preparation the government should be thinking of how to make sure that these frameworks have to work much better because that will have to be dealt with as you see the legacies of this crisis.

Farm laws are stuck in the midst of these protests and how crucial is it really to implement them?

Reform is always a difficult process and I hope that there will be a resolution to this sooner than later. Our view is by opening up the options to farmers it had the potential to raise farmers’ incomes. Of course, in any law you have to be careful in the way the implementation works out. And you have to pay very close attention to transition costs to people who might be harmed by it, especially vulnerable farmers that may be harmed by it.

How far is India from that 6-7% growth on 2019 levels?
So if the question is when will India return back to the pre-pandemic projected level? Based on our numbers out into 2025, it doesn't still get there. There is a big distance but that's not just India, there are many countries in that bucket that aren't closing the gap.

India may not hit pre-Covid growth levels before 2025: Gita Gopinath

"Lots of pandemic measures have been put in place in India and everywhere else in the world, given where the financial system was entering this crisis that could be one serious headwind going forward," IMFs chief economist Gita Gopinath tells ET Now.

economictimes.indiatimes.com

 

[Andhadhun]

 

[vi-va]

World Economic Outlook, October 2020: A Long and Difficult Ascent

The global economy is climbing out from the depths to which it had plummeted during the Great Lockdown in April. But with the COVID-19 pandemic continuing to spread, many countries have slowed reopening and some are reinstating partial lockdowns to protect susceptible populations. While recovery...

www.imf.org

 

[FuturePAF]

“India growth will be No more than 5% in 2021-2022. India’s Economic recovery will be slow and painful”. (Per the video’s description)

from the following video just posted, with data from top Indian economists

 

[Beast]

Another graph pull out from your rear for India.

 

[Jackdaws]

Of course we had a set back because of a pandemic which originated in China. The entire democratic world took a hit. It only delays the inevitable growth of India by a bit.

 

[Andhadhun]

Another graph pull out from your rear for India.

Unlike you I am not a "high IQ" chinese poster, so I know the difference between IMF's October 2020 prediction and UPDATED January 2021 forecast.

 

[FuturePAF]

Reserve Bank of India (RBI) governor C Rangarajan ... "The definition of a developed country is one whose per capita income is $12,000...”

An interesting point raised:

How long until China achieve the milestone of US$12,000 GDP per capita per current growth projections?

Is $12,000 a internationally recognized milestone for a developed country, no longer a developing country?

 

[Beast]

An interesting point raised:

How long until China achieve the milestone of US$12,000 GDP per capita per current growth projections?

Is $12,000 a internationally recognized milestone for a developed country, no longer a developing country?

USD 15.4 trillion economy / 1.4billion Chinese = USD 11000 Per capita

One or one and half more year to go.... To hit that target.

 

[My-Analogous]

What you could aspect from Indian Monitoring Fund?

 

[gulli]

Huge diplomatic win for whom?? I dont know, still a huge diplomatic win. Cheers

 

[vi-va]

An interesting point raised:

How long until China achieve the milestone of US$12,000 GDP per capita per current growth projections?

Is $12,000 a internationally recognized milestone for a developed country, no longer a developing country?

1.5 years later. $15.42 trillion in 2020.
I don't think $12,000 is some milestone. PPP is the real economy purchasing power. Some country with much higher GPD per capita, but they have to buy everything from overseas, such as Gulf countries, Ice Land, Norway, and most African countries. Their real purchasing power is much smaller than it looks.

Imo, the real life quality of Chinese is higher than it seems. China literally made most stuff by herself, infrastructure is much better than ALL developing countries, and a lot developed countries.

Clean water, education system, food security, personal safety, political stability matters a lot in my opinion. Most countries in the world are just economy colonies, they lost momentum of 4th industry revolution, including EU, Japan.

The digital economy of US and China is developing much better and faster then the rest of the world. EU and Japan literally don't have any IT giant which can make significant impact. While India with huge population was conquered by US IT giants.

List of largest Internet companies - Wikipedia

en.wikipedia.org

 

[FuturePAF]

I found it, $12,000 is the world bank’s definition of the upper limit of a “middle income country”. I know it doesn’t take into account PPP... but that’s where it came from.

Looking further, according to the world bank, in 2019 dollars, Above $12,536 a country is considered a developed country, high income country, and a “First world country”. That would mean at 17.55 Trillion, China would reach that level in 2019 dollars, let’s say $18 trillion adjusted for inflation. At China’s current growth, it might only be 2-3 years away.

Even for the most skeptical, once China’s economy surpasses the nominal GDP of the US, no one will be able to say China isn’t a first world/developed country. Which might happen by the end of the decade.

Middle income trap - Wikipedia

en.m.wikipedia.org

World Bank high-income economy - Wikipedia

en.m.wikipedia.org