Economic Affairs secretary Subhash Garg was recently reported saying that India is expected to third largest global economy by 2030 with a GDP of $10 trillion.
The secretary said that the government has been working in a very practical and efficient manner to achieve this goal. “It is a plausible aspiration for India to become a $10 trillion economy by 2030,” he said. Other believers for the same include Reliance Industries chairman Mukesh Ambani, Commerce and Industry Minister Suresh Prabhu, and Rana Kapoor, MD and CEO, YES Bank
Experts have however stated that the current account deficit (CAD) might rise in the current fiscal year. The difference between the inflow and outflow of foreign exchange (CAD) rose to $48.7 billion which is 1.9% of GDP in 2017-18 from 0.6% in the previous year. Although, according to Garg, even 2.5% CAD wouldn’t be a problem for the country. “If there is stability, in the current year capital account [inflows] should be good enough to take care and we may not worry even if it [CAD] reaches 2.5%,” Subhash Garg said at a CII event. “Last year, we had $160 billion of trade deficit, $82 billion services surplus and $70 billion remittances. In a way, we are pretty much in balance. But if oil goes up, this balance gets disturbed and the capital account funds it,” he added. Indian basket of crude oil price jumped from $66 a barrel in April to $74 a barrel currently.
Regarding the stricter monetary policies by the US, Garg said that out country can afford to be “less edgy and concerned” than it was during Taper Tantrum in the year 2013. He said that the last couple of years of monetary easing didn’t see flood of capital flows coming into emerging markets, including India. Unlike what happened in 2007. There is a confidence that the emerging market economies will do well,” he explained.
Garg said that the economy has achieved great finances since demonetization, commenting on the banking sector. He added that mutual funds have become a key non-banking investor. He said that the interaction between corporates and tax infrastructure has changed due to GST.
India is capable of achieving a greater target if all the right steps are taken. India had a GDP of $2.59 trillion in 2017, higher than $2.58 trillion of France, according to reports. The country’s economy grew at 3.5% after the first 40 years of independence and now grows at 7-8%. “Eight per cent growth is very much achievable. If we keep that, we can look forward to be an of $10 trillion, which will be the third-largest economy in the world,” Garg said. The economy could go over $10 million if the country’s economy keeps growing at 8% a year. The Reserve bank of India targeted the inflation rate at 4% a year and if that range is met, the economy could grow by 12% a year with current prices. A higher inflation rate would help meet the target even sooner.