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Amid the expectations of India becoming the third largest economy in the world with a Gross Domestic Product (GDP) of USD 5 trillion by 2027, the Union Minister of Commerce and Industry Piyush Goyal has now hoped that the country will achieve a GDP of USD 55 trillion by 2047, in its pursuit of becoming a developed nation by the centenary of independence.
Speaking at an Associated Chambers of Commerce and Industry of India (Assocham) event, Goyal highlighted the need to become self-sufficient in defence and electric mobility along with enhancing the digital public infrastructure to achieve the USD 55 trillion economy mark.
Goyal said, “Going forward, the focus on efforts to make ourselves self-sufficient in defence, replacing the oil economy with the electric economy, bringing quality into play in our manufacturing setup and consumer choices and preferences. Bringing transparency and technology to every single home. All of these will collectively help us have a stronger currency, even stronger macro-economy and hopefully, get us to the USD 55 trillion economy.”
Mentioning that an increased focus on key areas can lead to the strengthening of the country’s currency, Goyal highlighted, “As we increase our shipping, focus on electric mobility, become self-sufficient in defence, do a little bit more in things like oil seeds, rubber and pulses, we are looking at rupee appreciation.”
The minister Elaborated on the key sectors that are going to play a crucial role in the country’s journey to become a developed nation. ‘Tourism has always been considered as a sector which can give a leg up to both economy and employment. Similarly, the focus is on crunch ideas. The thrust on semiconductors, shipping and bringing modern technologies into our day-to-day life, the digital public infrastructure (DPI) and artificial intelligence (AI). India produces a huge number of STEM graduates and many of them are now choosing to come back to India from across the world. Putting together their knowledge and capital will play a crucial role,’ Goyal stated during the unveiling of a book titled ‘India@100: Envisioning Tomorrow’s Economic Powerhouse by Krishnamurthy Subramanian.
The Math Of USD 55 Trillion Economy
Subramanian, Executive director at the International Monetary Fund (IMF), explained how India’s goal is possible in economic terms. The author stated, “From 2016 to March 2024, despite Covid-19 and Ukraine war, the average inflation has been around five per cent. There is a concept in international economics that when the rate of inflation is higher in the currency, that will translate into a higher depreciation. A very reasonable expectation is that the inflation in the next two and half decades will be five per cent. So, eight per cent growth and five per cent inflation, that’s 13 per cent in nominal rupee terms. Subtract one per cent depreciation, then it becomes 12 per cent in dollar terms.”
“We use the rule of 72, in economics, to know the number of years it takes to double. So, the doubling of the economy now happens every six years. So, over the next 24-year period, you have 4 doubling periods. It takes the USD 3.25 trillion economy to USD 6.5 trillion, then to USD 13 trillion, to USD 26 trillion and then close to USD 52 trillion economy by 2047,” he highlighted while explaining the math.
Need For Bureaucratic Reforms
While addressing the challenges that the country faces in its journey, both the minister and the author agreed that reform in bureaucracy along with political stability is going to make things easier. “People of the country recognise that for the next 25 years, they want a stable, decisive and pro-active government,” Goyal noted. He further added, “Technology plays a very important role when we are trying to change the influence of bureaucracy in government function. PM is continuously working towards De-criminalising laws, reducing the compliance burden.”
Subramanian responded in agreement and mentioned, “Bureaucracy and judiciary. Reforms in just these two sectors can deliver one per cent additional GDP growth each.”
