India may not become a $5 trillion economy before FY29, IMF data shows

According to reports, The gross domestic product (GDP) of India will hit the target of $5 trillion not before FY29, the International Monetary Fund’s (IMF) updated database shows.

Indian Prime Minister Narendra Modi in 2019, before the COVID-19 pandemic rattled the global economy, had sought to make India a $5 trillion economy by FY25, the report said.

But as per the IMF database, India’s nominal GDP may rise to $4.92 trillion in FY28 (the database has not forecasted beyond this period). The latest forecast hints that the target of $5 trillion may fructify with a minimum delay of four years.

The IMF in April in its World Economic Report slashed its growth forecast for India for FY23 to 8.2% owing to the impact of Russia’s invasion of Ukraine, as it expects the higher oil prices to weigh on private consumption and investment. IMF’s expectation is higher than that of the RBI, which sees growth at 7.2% in the current fiscal and 6.3% in the next, the report said.

Earlier in February, Chief Economic Adviser V Anantha Nageswaran had expressed hope that India would become a $5 trillion economy by FY25 or the next year on the back of 8-9% sustained growth.

Some experts had argued that the target was beyond reach in the current circumstances. Former Reserve Bank Governor C Rangarajan late last year said that India needs to grow at 9% per annum for the next five years in order to achieve that.

PM Modi’s ambitious target of making India an economic powerhouse by FY25 received a blow when Covid-19 spread and lockdowns had to be imposed to curb the spread. The nascent recovery got another setback when Russia deployed a ‘military operation’ in Ukraine which prompted downgrades in growth forecasts for the global economy, the report said.

India is expected to overcome COVID-19 losses in 2034-35, a report prepared by the RBI’s research team said last week. “The output losses for individual years have been worked out to Rs 19.1 lakh crore, Rs 17.1 lakh crore and Rs 16.4 lakh crore for 2020- 21, 2021-22 and 2022-23, respectively.” (Economic Times)