Indian Prime Minister Narendra Modi had been trying to turn India into a $5 trillion economy by FY25 in 2019, before the COVID-19 pandemic rocked the global economy.
But according to the IMF database, India’s nominal GDP could rise to $4.92 trillion in FY28 (the database did not make any forecasts beyond that period). The latest forecast suggests that the $5 trillion target could bear fruit with a lag of at least four years.
The IMF lowered its FY23 growth forecast for India to 8.2% in April in its World Economic Report due to the impact of Russia’s invasion of Ukraine, as it expects higher oil prices to weigh on private consumption and investment. The IMF’s expectation is higher than that of the RBI, which expects growth of 7.2% in the current fiscal year and 6.3% in the next.
Earlier in February, Chief Economic Adviser V Anantha Nageswaran had expressed hope that India would become a $5 trillion economy based on sustained growth of 8-9% by FY25 or next year.
Some experts had argued that the goal was unattainable under the current circumstances. Former Reserve Bank Governor C. Rangarajan said late last year that India would need to grow at 9% a year over the next five years to achieve this.
PM Modi’s ambitious goal of making India an economic powerhouse by FY25 took a hit when the spread of Covid-19 and lockdowns had to be imposed to stem the spread. The nascent recovery suffered another setback when Russia conducted a “military operation” in Ukraine, which led to a downgrade in growth forecasts for the global economy.
India is expected to overcome COVID-19 losses in 2034-35, according to a report prepared by RBI’s research team last week. “Production losses for individual years have been calculated at 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.”
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