Stating that the economy is in bad shape, former Reserve Bank governor C Rangarajan has said at the current growth rate, reaching the $ 5 trillion GDP target by 2025 is “simply out of question.”
While the first quarter growth slipped to a six-year low of 5 per cent, the best forecast for the second quarter is 4.3 per cent now. Even RBI has lowered its growth full year forecast by a full 9o bps in two months to 6.1 per cent in its October policy review.
“Today our economy is about $ 2.7 trillion and we are talking about doubling this over the next five years at $ 5 trillion. The required rate of growth to achieve that level is in excess of 9 per cent per annum. Reaching $ 5 trillion by 2025 is simply out of question,” Rangarajan said here on Thursday. “You have lost two years. This year it is going to be under-6 per cent growth and next year it may be about 7 per cent. Thereafter the economy may pick up,” he said while addressing a function organised by IBS-ICFAI Business School. He also if at all the GDP becomes a $ 5-trillion gorilla, our per capita income will grow still $ 3,600 up from the present $ 1,800, leaving us still in the low-middle income country bracket.
“The definition of a developed country is the one whose per capita income is $ 12,000. It will take 22 years for us to reach that level provided we grow at 9 per cent per annum,” the former central banker said.