India is unlikely to become a $ 5 trillion economy by 2024-25 due to the slow decline caused by the COVID-19 pandemic, said University of Massachusetts professor Vamsi Vakulabharanam.
In addition, India’s economy will be small for a long time next year compared to its 2019 size, Vakulabharanam said.
Vakulabharanam said that while COVID-19 was a major factor in the economic downturn, it was noteworthy that India’s decline was significantly lower than that of other developing countries and the global economy last year.
“To date, the current Indian GDP is below $ 3 trillion. If this is to fall to $ 5 trillion in four years, the economy should grow by more than 13 percent a year, on average,” he said.
In 2019, Prime Minister Narendra Modi envisaged making India a $ 5 billion economy and a world power house by 2024-25.
“Even in the worst of circumstances, it is very unlikely that this will happen,” said Vakulabharanam, co-director of the Asia Political Economy Program at the University of Massachusetts Amherst (USA).
According to him, even if all goes according to the current RBI and IMF estimates, the Indian economy will be smaller for a longer period next year than in 2019.
The IMF and RBI have recently reviewed growth rates. According to the latest CSO rate, the economy gained 7.3 percent last year, and according to the latest RBI, the economy will grow by 9.5 percent this year.
Asked what financial measures are needed to support disadvantaged households, he said they have two basic needs: minimum subsistence and affordable health care.
“After this unprecedented crisis in the Indian economy, the government should have taken drastic measures to support poor families with both figures,” Vakulabharanam said.
Regarding high inflation, he said the current high inflation rate was not a major concern for the economy.
“With most inflation coming due to lower supply and consumption, inflation should be a priority for the government,” he said, adding that if this led to short-term inflation, that should not bother the government.
Vakulabharanam, however, noted that it was important to protect the poor from inflation on important issues, so the government should take steps to ensure that the poor do not suffer in the short term.