India's GDP could reach $5 trillion (Rs 5 lakh crore) by 2026-27 if the country's economy grows at an annual average rate of 11.6 per cent during the next six years, according to a Confederation of Indian Industry (CII)- CARE Ratings knowledge paper.
The fresh investments required to take the Indian economy to this level would amount to Rs 498 lakh crore over a seven-year period, between 2021-2027. They (fresh investments) need to progressively increase annually from Rs 43 crore to Rs 103 lakh crore during the said period.
The paper added that while a "part of this investment would be borne by the central and state governments combined, the main enabler will be the financial sector viz. banks, debt capital markets, and foreign capital."
It stated that the domestic economy marred by the coronavirus pandemic is expected to return to positive economic growth from 2021-22 onwards.
"Covid-19 has emerged as the biggest impediment towards the country moving towards a $5 trillion economy. The pandemic has led to an unparalleled global economic crisis with uncertain prospects about the recovery," the paper stated.
How will India achieve the ambitious $5 trillion target?
Calling for infrastructure creation as an imperative for the Indian economy hit severely by the pandemic, the study underscored that infrastructure building would have the much-needed multiplier effect. It would "generate employment and demand across sectors, improve the ease of doing business, and improve competitiveness as well as quality of life," the study emphasised.
Along with this (infrastructure creation), sustainable policies and reforms that would "buttress the long-term prospects would be critical," it stated adding that "the aspiration of becoming a $5 trillion economy would have to be led by infrastructure creation, which necessitates heavy investments for the same."
As per the National Infrastructure Pipeline (NIP), the infrastructure investments amounting to Rs 59 lakh crore during 2020-21-2024-25 would come from the Centre and state governments, while the remaining financing of the infrastructure investment and non-infra investment would have to come from the financial sector i.e., from banks, corporate bond markets and by way of foreign capital.
The paper pointed out that although the government has embarked on a series of measures to stimulate the investment cycle, there are several issues issues such as - land acquisition, environmental clearance, delays in project implementation, procedural delays, enforcement of contracts, and availability of funds among others - that come in the way of infrastructure building.
Ironing out these bottlenecks would be necessary for the achievement of the set targets for infrastructure, and the $5 trillion economy goal eventually, it added.