CEA Subramanian Says $5-Trillion GDP Target By FY25 ‘Definitely Achievable’
India’s March quarter GDP was at a 20-quarter low of 5.8 percent, pulling down the full year number to 6.8 percent.
Chief economic advisor to the Union finance minister Krishnamurthy Subramanian Friday exuded confidence in the economy swelling to a $5-trillion giant by 2025, saying the high target is "definitely achievable."
The statement comes amidst continuously falling growth numbers and the gathering clouds over the global economy with many warning that the world is headed to a far deeper recession than what it went through in 2008 spawned by the sub-prime crisis in the US.
It also comes on the heels of plunging corporate sales and profits, and deepening crisis in the shadow banking space.
"The $5 trillion target for 2025 is definitely achievable," he said here Friday, backing his confidence with the theory of motivation which states that if a goal is stretched by just 10-15 percent on the higher side that creates a sweet spot and that private investment and behavioural economics will drive the economy forward.
"There is ambition involved in it," he said addressing a gathering on 'Blueprint for $5 trillion economy' .
"Management students will know that as per the theory of motivation, if a target is stretched by 10 to 15 percent it is called a sweet spot. If the target is too small then there will be no motivation to achieve it, and if it is too high then also people may quit," he said.
"But this target if definitely achievable," Subramanian, who laid the $5-trillion GDP roadmap by 2025 in the economic survey earlier this month, said.
It can be noted that in the March quarter GDP printed at a 20-quarter low of 5.8 percent, pulling down the full year number to 6.8 percent. And there is no indication that the June quarter will outdo the March numbers given the massive sluggishness in the economy partly driven by the just hustings and more so by the massive deficiency in the monsoons and the plunging consumption demand across the country as reflected in auto sales or fast-moving consumer goods demand.
The GDP grew to $1 trillion during the first 55 years of our Independence. But during the past five years, between 2014 and 2019, it grew from $1.7 trillion to $2.7 trillion. And we are on course to be a $3 trillion economy now.Krishnamurthy Subramanian, Chief Economic Advisor
But he was quick to add that to hit the $5 trillion target, the economy should grow 8 percent in real terms in each of the next five years. He was quick to add that investment, especially private investments-which has been missing for almost a decade now and unlikely to revive anytime soon with falling demand and liquidity crisis--will be the key to achieve 8 percent growth.
While the government has projected a 8 percent growth this year, IMF has scaled it down to 7 percent but most analysts have a consensus forecast of 6.6-6.8 percent for FY20.