In the Interim Budget 2019-20, Finance Minister Nirmala Sitharaman laid out a 10-dimensional vision, aimed at building a $10 trillion GDP by the mid-2030s.
In NITI Aayog’s Governing Council meeting held in June 2019, after the Modi Government returned to power with a large absolute majority, Prime Minister Modi spoke about India's GDP becoming $5 trillion by 2024. That became the national goal for the next five years.
Finally, NITI Aayog’s Governing Council meeting held on 27 July 2024, after the Modi-led Government assumed power for the third successive five-year term, discussed the Viksit Bharat@2047 Vision, aiming at a $30 trillion GDP.
Three different goals for India’s GDP ambition in five years are also related to three different time periods!
$10 Trillion Goal Forgotten Soon
In paragraph 68 of the budget speech for the interim budget 2019-20, acting Finance Minister Piyush Goyal prophesied and laid down the Modi Government’s GDP ambition, “We are poised to become a five trillion dollar economy in the next five years and aspire to become a ten trillion economy in the next eight years thereafter”.
The goal of $10 trillion GDP by the early/ middle 2030s was thus announced to the nation in the Lok Sabha. This claim also appeared in BJP’s manifesto for the Lok Sabha elections and was further boasted about by the PM at election rallies.
The goal, however, was forgotten after the 2019 Lok Sabha elections. The ten trillion economy was not mentioned in any major policy or programme document. It was wiped from existence.
$5 Trillion GDP Goal Becomes the Mantra
The minutes of the NITI Aayog Governing Council meeting held on 15 June 2019, after the Lok Sabha elections but before the presentation of Budget 2019-20 on 5 July, records:
“—The Prime Minister said that by working with the feeling of collective responsibility both long-term and short-term goals will be achievable. While the goal to make India a 5 trillion dollar economy by 2024 is challenging, it is totally achievable too. There is a need for State governments to recognise their core competence and utilize their potential properly. If each State decides to increase its share in the country’s GDP that will accelerate the process of achieving USD 5 trillion economy.”
Finance Minister Nirmala Sitharaman spoke about $5 trillion GDP by 2024-25 and sanctified it in the Budget 2019-20. Thereafter, it became the government’s new mantra.
India Fails to Achieve $5 Trillion GDP
India’s GDP was $2.70 trillion (all data from IMF, in current US dollars) in 2018 (2018-19 for India), two years before the announcement of the $5 trillion GDP.
India’s GDP grew to $3.35 trillion by 2022-23, ie, after four years, and to $3.57 trillion in 2023-24, after five years. India could add only $0.87 trillion to its GDP in all five years of the second term of the Modi Government.
The IMF projects India’s GDP to reach $3.94 trillion in 2024 (2024-25 for India), the last year fixed for attaining a $5 trillion GDP goal. However, the IMF has had optimistic predictions in the recent past. As a result, India missed the IMF’s projected India GDPs in almost all the five years since 2018-19. There might again be a slip in 2024-25.
Even if India attains $3.94 trillion GDP by 2024-25, we would have progressed by only $1.24 trillion ($3.94 trillion minus $2.70 trillion) out of the required $2.30 trillion ($5 trillion minus $2.70 trillion) to make India a $5 trillion economy by 2024-25.
For understandable reasons, the government has stopped talking about the $5 trillion GDP goal since 2023. Nobody wants to put the spotlight on failures.
Viksit Bharat@2047 and $30 trillion GDP
The $10 trillion and $50 trillion GDP goals were set in the forseeable future (2024-25 & middle of 2030s). People could assess national progress (or lack thereof) in real-time towards it.
Failures need to be corrected by making mid-course corrections. The government also has the opportunity to undertake necessary course correction to move towards the $5 trillion and $10 trillion goals.
Unfortunately, the government seems to be adopting a very distant timeframe around 20 years in the future (2047) while setting/resetting the Viksit Bharat/ trillion GDP goal.
A press release from the government (PIB) on 26 July 2024 announced, in the context of the NITI Governing Council meeting’s theme ViksitBharat@2047, the government’s central focus on making India a developed nation. The press release noted that “India is on track to become the world's third-largest economy with GDP crossing US$ 5 trillion and aspirations to reach a US$ 30 trillion economy by 2047.”
This goal, along with a $18,000 per capita income, has been set in the Approach Paper for the Vision for Viksit Bharat@2047 (publicly unavailable), which the Governing Council discussed in the meeting held on 27 July.
Minutes Curiously Do Not Mention $30 Trillion GDP
NITI Aayog and PIB issued short minutes of the 8th meeting of the Governing Council held on 27 July 2024.
Surprisingly, the minutes make no mention of the $30 trillion GDP ambition even in the year @2047, when India is expected to become a Viksit (developed) Bharat/ India.
Perhaps we will have to wait for the detailed Vision and Road Map of Viksit Bharat 2047 to come from the government (if it ever does), to know whether the goal has been formally adopted or not.
Decide on Making India a High-income Economy by 2050
The World Bank provides a classification of countries into four broad income groups: low-income countries (LICs), lower-middle-income countries (LMICs), upper-middle-income countries (UMICs) and high-income countries (HICs).
India is currently an LMIC, with an average per capita income of $2,389 in 2022 (2022-23 for India). The UMIC and HIC per capita income cut-offs for 2022 are $4,466 and $13,845 respectively. India is nearly 90 percent away from the UMIC income cut-off and 500 percent away from the HIC income cut-off.
The World Bank income cut-offs are set in current US dollars. The $13,845 HIC income cut-off will also be reset/ increased over the years. NITI Aayog’s assumption of $18,000 per capita income for 2047 is perhaps based on the $13,845 in 2022.
A developed nation is not the one with the third largest GDP, but the one whose citizens enjoy a life afforded by an HIC country. The HIC income cut-off signals the standard for a developed country, on average, for all the citizens. When a country has that level of average income, even the poorest can hope to have higher incomes than our current per capita average of about $2,500.
Let the government adopt the goal of making India a HIC to enable its people to afford the standards of the high-income country by 2050 when India celebrates 100 years of its becoming a Republic. In addition, the government must keep both $5 trillion and $10 trillion targets for 2027-28 and 2035-36 respectively.
Once the goals are set/ reset, the government needs to undertake all necessary actions, policies and reforms to energise all individuals, households, businesses and corporations to work to attain the goal. That will certainly make for a truly Viksit Bharat.
(The author is former Economic Affairs Secretary and former Finance Secretary of India. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)
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