Outlining Prime Minister Narendra Modi's vision to make India a $5 trillion economy by FY25, Chief Economic Advisor Krishnamurthy Subramanian, during the presentation of Economic Survey 2019, said India needed to sustain a real GDP growth of 8 per cent to be a $5 trillion economy. The survey said the GDP at this rate could be sustained by a 'virtuous cycle' of saving, investment and exports. Here are five major points from the economic survey report that could help India achieve the $5-trillion economy status.
FULL COVERAGE: Union Budget 2019
1) Investment: According to the Economic Survey 2019, private Investment is the key driver of growth, jobs, exports and demand. The government expects investment rate to pick up in FY20 on higher credit growth and improved demand rebound in investment cycle, said the Economic Survey 2019. Growth in investment, which had slowed in many years, has bottomed out and has started to recover since 2017-18. Growth in fixed investments picked up from 8.3 per cent in 2016-17 to 9.3 per cent in 2017-18 and further 10 per cent in 2018-19, the survey said.
2) Jobs: The survey says job creation is mandatory to achieve the $5 trillion economy status. It says that unshackling MSMEs could help to achieve greater profits, job creation and enhanced productivity. This can be done via: sunset clause of less than 10 years, with necessary grand-fathering, for all size-based incentives; and deregulating labor law restrictions to create significantly more jobs, it adds.
3) Savings: Exports and manufacturing must ideally be focused as part of the growth model to sustain GDP at 8 per cent rate. "Because higher savings preclude domestic consumption as the driver of final demand," said the survey.
4) Demographic phase: The Economic Survey 2019 has predicted a slowdown in population growth in the next two decade. "Working age population would grow by roughly 9.7 million (97 lakh) per year during 2021-31 and 4.2 (42 lakh) million per year during 2031-41. This could be an ideal for India to propel its economy," the survey said.
5) Energy conservation: Enabling inclusive growth through affordable, reliable and sustainable energy is another step to make India a $5-trillion economy. The survey has suggested that 2.5 times increase in per capita energy consumption is needed for India to increase its real per capita GDP by $5000 (at 2010 prices), and enter the upper-middle income group. And, four times increase in per capita energy consumption can achieve 0.8 Human Development Index score.