Mumbai: A 45-minute session on the topic, “The $5 Trillion Economy: Rhetoric or Reality?”, saw two renowned economists, former Deputy Chairman of India’s Planning Commission, Montek Singh Ahluwalia , and NITI Aayog Vice President Dr. Rajiv Kumar witnessed many diverse views, but both affirmed one commonality – the goal of a $5 trillion economy is not that easy to be achieved, given certain factors that bind the Indian economy.
On the second day of the ABP Ideas of India Summit, journalist and author Shankkar Aiyar, who chaired the session, posed to Rajiv Kumar the relevant question, the topic of debate – What is the deadline for the 5 trillion economy? of dollars ?
Unrealistic and not a rhetoric
Kumar, while responding, categorically mentioned that the goal is not unrealistic and surely not rhetorical. However, he says, the path is not so easy to achieve. “If things stay normal and we don’t see a fourth wave of a pandemic or a terrible outcome in Ukraine, we can achieve 8% growth because we made it. If we can do that, we can double the economy in about 7-8 years,” Kumar said.
“Given the fact that we know now, the uncertainties are great. I don’t know the outcome of the world when there is a war. We are already a $2.7 billion economy. Now we need to double it to 8% growth and with all the conditions in place it is achievable,” he added.
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The former economic planner, however, said the whole business of achieving an economic goal is a slogan, and slogans are catchy.
“It’s not fair to force the government to reach $5 trillion by 2024. Because the fact is you have a pandemic and a lot of other things. It’s a very unusual time. So now let’s look at the revised audit which is $10 trillion by 2030. If you rephrase your question, is this audit feasible? As an outside economist, I would approach this question as what does this mean for the growth rate? Now the Indian economy today is around $2.95 trillion. In order to reach something close to $10 trillion by 2030 and allow for an international inflation rate of 3% in dollars. It will have to grow by 11% per year for nine years,” said Ahluwalia, adding that good growth is linked to certain factors on a global scale, which have an impact on growth.
“The economy had slowed before the pandemic. There can be various reasons, maybe demonetization or GST implementation. However, I do not address these factors. The caveat being uncertainty and the world has changed too, and the problem of climate change is there as well,” he said.
Reforms can bring India to its goal. On that note, the session chair asked about reforms in state government sectors. In his response, Kumar said we need to move the conversation from Delhi.
“NITI Aayog is doing everything possible for this. Every state is different. We have put in place state-based regimes. Each state should develop its own set of reforms. NITI Aayog engages with States. We need to see how to make private investment more viable in state-run units. Gujarat, UP and Haryana are following the Centre’s guidelines for reforms,” he said.
Kumar mentioned that the government is on the right track. The Air India divestment is one of them. The government has proposed the IPO of LIC and the privatization of two PSBs is also on the anvil.
According to Vice President of NITI Aayog, private investment is an engine of growth for the economy.
Reforms in the public sectors of the state
On the issue of energy sector bailouts and labor law reforms, Ahluwalia said sectors such as education and health are constitutionally within the domains of the states. “States have the responsibility. But most states are unable to embark on the path of reform due to weak financial conditions. This is why it is much easier for states to hire contract labour,” he pointed out.
Reforms in the agricultural sector
During the last stage of the debate, Aiyar asked about reforms in agriculture.
Kumar said the government was looking to pioneer agro-ecology, which is chemical-free agriculture. “We need to start talking to the state government to encourage them to change the cultivation pattern and prices. There is a science behind it. Agriculture needs a paradigm shift. He stressed on this point that there should be concrete coordination between the Center and the States on the question of agriculture.
Opportunity for India
Both panelists agreed that there is a window of opportunity for India after the Russian-Ukrainian conflict as the world order may see a change in the future.
“I just hope the world doesn’t break into blocks. But, yes, there is an opportunity for India. The rules-based order must remain without any hegemony and developed countries must act selflessly,” Kumar said.
Ahluwalia, however, said, “It certainly indicates that we need to organize for a multi-base world order.” He added that India needed to strike a balance between European powers and Asian powers, while engaging with the QUAD.
ABP Network’s two-day ‘Wild Stone Showcases Ideas from India’ summit brought together thought leaders from diverse fields – from culture, sports and film to technology, business and politics – to talk about India’s journey so far.