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HomeEconomyIndia ‘18-24 months behind schedule' to achieve $5 trillion economy: Govt advisor...

India ‘18-24 months behind schedule’ to achieve $5 trillion economy: Govt advisor Sanjeev Sanyal

Modi govt had in early 2018 announced vision to achieve $5 trillion economy level by the 2025 fiscal, but the domestic economy started losing momentum because of the Covid pandemic in 2020.

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New Delhi: The government is at least 18-24 months behind schedule in becoming the $5 trillion economy that it had envisaged before the Covid-19 pandemic hit India and the rest of the world, and disrupted the growth momentum, Principal Economic Adviser Sanjeev Sanyal told ThePrint in an interview Monday.

“The original time frame has got a little disrupted because of obvious reasons. But we are at the economic level that we were at before the pandemic. So I would argue that we are 18-24 months behind schedule at most,” Sanyal said.

According to him, there are many things that work in the government’s favour going forward — for example, the banking system is much healthier, he said.

The government had in early 2018 announced its vision to achieve the $5 trillion economy level by the 2025 fiscal, and had come out with a roadmap to achieve it. However, the domestic economy had started losing momentum with the GDP growth falling to four per cent in 2019-20.

The GDP growth in 2018-19 had stood at 6.8 per cent.

The Economic Survey tabled by Finance Minister Nirmala Sitharaman in Parliament Monday, has projected the Indian economy will grow between 8 and 8.5 per cent in 2022-23, amid expectations of recovery in momentum due to the benefits of the supply-side reforms announced by the Narendra Modi government in the past two years.

India prepared for global monetary tightening

Sanyal, who has compiled the Economic Survey 2021-22 along with his team, said the government is prepared to handle some monetary tightening that central banks may undertake globally.

One of the ways in which India is preparing itself to respond to monetary tightening conditions globally is by building the foreign exchange reserves, he said. Foreign exchange reserves stood at $634 billion as on 31 December, equivalent to 13.2 months of merchandise imports and higher than the external debt.

The Economic Survey too had said that a combination of higher foreign exchange reserves, sustained foreign direct investment, and rising export earnings would provide an adequate buffer against possible global liquidity tapering in 2022-23.

Last week, the US Federal Reserve left its policy rate, called the federal funds rate, target range unchanged at 0.00-0.25 per cent, but indicated it was preparing to hike key rates as soon as growth recovers amid a rampant price rise in the world’s largest economy.

 

Working hard to make LIP IPO possible

Sanyal also said that the government has been working hard to ensure the listing of the state life insurer Life Insurance Corporation (LIC) takes place before 31 March, 2022.

In her budget speech last year, Finance Minister Nirmala Sitharaman had announced that the government will bring the LIC IPO, and that necessary amendments will be made to the laws to facilitate the process.

The initial public officer of LIC is crucial for the government in the 2021-22 financial year as majority of disinvestment receipts are budgeted from it. The IPO is expected to fetch the government as much as Rs 1 lakh crore, more than half of the budgeted receipts at Rs 1.75 lakh crore for the current fiscal year.

So far, the government has raised around Rs 9,330 crore from the total disinvestment target. Last year, the government was only able to raise Rs 32,000 crore from disinvestment against a target of Rs 2.1 lakh crore as the country was severely hit by the Covid pandemic.


Also read: Imported inflation driven by rising global fuel prices a concern for India: Govt adviser Sanyal


 

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