The country will need to grow by 9 per cent every year for five years continuously and raise the aggregate investment rate to 38 per cent of GDP to achieve Prime Minister Narendra Modi’s target of turning India into a $5-trillion economy, EY has said.
In its latest edition of Economy Watch, EY said assuming India grows by a projected 7 per cent in the current fiscal year ending March 31, 2020, the size of the economy will grow to $3 trillion from $2.7 trillion in the previous year.
It will have to grow by 9 per cent in each of the five subsequent years to take the size of the economy to $3.3 trillion in FY21, $3.6 trillion in FY22, $4.1 trillion in FY23, $4.5 trillion in FY24 and $5 trillion in FY25.
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“Assuming an inflation rate of 4 per cent, which is the target inflation rate according to the Monetary Policy Framework, a real growth rate close to 9 per cent would be required to increase the size of the Indian economy to $5 trillion by FY25. This implies a nominal growth rate of 13 per cent, assuming an average annual depreciation of the rupee viz-a-vis the $ at 2 per cent,” it said.
Source: The Hindu BusinessLine
