New Delhi: Prime Minister Narendra Modi Thursday reiterated his government’s intent to make India a $5 trillion economy in the next five years, but did not acknowledge the sharp slowdown facing the Indian economy.
In his sixth Independence Day speech as Prime Minister, Modi outlined the need for every Indian district to become an export hub while extending an olive branch to industry and investors by acknowledging their role as wealth creators.
“Many think India becoming a $5 trillion economy is difficult in the next five years. But we should aim high,” he said, reiterating that the aim was not unrealistic.
He added that though India became a $2 trillion economy in the first 70 years after Independence, it had grown by another $1 trillion under his government. In pursuit of the $5 trillion goal, Modi said, an investment of Rs 100 lakh crore (100 trillion) will be made on developing modern infrastructure like ports and highways.
To become a $5 trillion economy in the next five years, the Indian economy needs to grow consistently at 8 per cent every year. But with the economy facing a sharp slowdown, economists do not expect the economy to grow at even 7 per cent in 2019-20.
In fact, Bibek Debroy, chairman of the Prime Minister’s Economic Advisory Council, has estimated that India’s economy will grow at only 6 per cent in 2019-20.
The Indian economy slowed to a five year low of 5.8 per cent in the fourth quarter of 2018-19 and economists expect that an economic revival will have to wait for the second half of 2019-20.
For the full year of 2018-19, the Indian economy slowed, for the second consecutive year, to 6.8 per cent, from 7.2 per cent in 2017-18 and 8.2 per cent in 2016-17.
Among other things, Modi stressed the need for India to increase its exports, and pushed for access to global markets for even small industries.
“Every district in India has to think about becoming an export hub. They all have their own specialities,” he said.
“Be it sweets, utensils, saris or ‘ithar (perfume)’, these entrepreneurs should be able to enter global markets,” Modi added, claiming that this will also help in job creation.
His comments come at a time when India is facing a massive consumer demand slowdown as reflected by the falling sales of automobiles and of consumer durables.
A message to investors
Over the last few weeks, the Modi government announced a few measures, such as the super rich surcharge on foreign portfolio investors and penal provisions for failure to meet corporate social responsibility norms, which displeased investors and industry. The government has, however, signalled a rethink in the last one week.
Acknowledging industry’s role in creating jobs, Modi in his speech Thursday made an appeal for greater investments.
“Wealth creators should not be looked at with suspicion. When there is no wealth creation, then there can be no wealth distribution, which is important for eradicating poverty,” he said.