India could have the world's third largest GDP by 2025 if the country maintained its present growth rate, Prime Minister Manmohan Singh said on Monday while conceding that the target of 9% growth for the next five years was "very ambitious" given the current state of the global economy.
Addressing the golden jubilee celebrations of the Indian Institute of Management-Calcutta, the prime minister cautioned that while the "rosy future" was within the nation's reach, it was not an assured outcome.
Manmohan Singh, who is regarded as the architect of India's economic reforms for having initiated them as finance minister between 1991 and 1996, said the reforms programme had courted controversy in the early years but all regimes at the centre had carried them forward.
"There have been differences of emphasis but the direction has remained the same. Most state governments have also acted in the same spirit.
"Because of our gradualist approach, it took time for the economic reforms to have an impact. However, it is now clear that their impact has been remarkable."
"If we can continue to grow at this rate, we are well positioned to be the country with the third largest GDP in the world by 2025."
He referred to the nine% growth target fixed for the 12th Five Year Plan (2012-17), and said: "Since we have already achieved about 8.2% in the 11th plan period, it may seem that a transition to 9% growth is not difficult."
"However, it is in fact a very ambitious target given the current global economic situation, which is full of uncertainties about the prospects in industrialised countries and their implications for global capital markets," he added.
A downgrade of US sovereign debt coupled with fears of another bout of recession in the world's largest economy and in Europe has sent shivers down the spines of investors across global stock markets and the likelihood of a demand slowdown is gaining strength.
"Our own economy has also slowed down compared to last year, and this year's growth may be around eight% or a little more, at best," said Manmohan Singh, alluding to the effects of the crisis.
"Despite this sobering environment, we should aim at nine% growth. This is because we are not planning for today, or even for the rest of this year. We are planning for the five year period from 2012-13 to 2016-17."
Referring to the high growth trajectory of Asian countries like Japan and South Korea in the past, and China's fast-paced economic expansion in the last two decades, the prime minister said India too could grow at a rapid rate provided it could scale up infrastructure and bring out wide-spread reforms.
"India is now capable of repeating the performance of this group of Asian countries. But we must remember that it will not happen automatically, by simply proceeding on a business as usual basis. There are many difficult challenges we must overcome to achieve the transition to nine% growth."