Focus on rural economy, investments to make India $5 trillion economy in 5 years

The government announced its intent to make India a $5 trillion economy in the budget last month. “The Indian economy will grow to become a $3 trillion economy in the current year.

Prime Minister Narendra Modi on Thursday reiterated his government’s resolve to make India a $5 trillion economy in the next five years through several initiatives, including Rs 100 lakh crore investment in infrastructure, making the policy environment more predictable, and pushing for “Make in India” with special emphasis on the rural economy, and micro, small and medium enterprises (MSMEs).

Prime Minister Narendra Modi, former prime minister Manmohan Singh, former vice president Hamid Ansari during a reception organised on the occasion of 73rd Independence Day, at Rashtrapati Bhavan in New Delhi, Thursday, Aug. 15, 2019.(PTI)

“In the last 70 years, we became a $2 trillion economy, but in the last five years, we added $1 trillion to the economy. This gives me the confidence of becoming a $5 trillion economy in the coming years,” Modi said in his Independence Day speech.

PM on I-Day: India can become $5 trillion economy in the next 5 years 

The government announced its intent to make India a $5 trillion economy in the budget last month. “The Indian economy will grow to become a $3 trillion economy in the current year. It is now the sixth largest in the world. Five years ago, it was at the 11th position,” finance minister Nirmala Sitharaman said in her budget speech.

The PM said the fundamentals of the Indian economy were “very strong”, which gave him the confidence to achieve the target. “Today, the government in India is stable, policy regime is predictable... the world is eager to explore trade with India. We are working to keep prices under check and increase development,” he said.

He hinted at major economic reforms in the future based on global best practices to hasten growth. “India does not want incremental progress. A high jump is needed; our thought process has to be expanded. We have to keep in mind global best practices and build good systems,” he said.

Modi stressed the need to boost exports by utilising local strengths. “The time has come to think about how we can boost exports. Each district of India has so much to offer. Let us make local products attractive,” he said. He said that local strengths could be harnessed through export hubs.

Underscoring the importance of tourism in developing the local economy, he urged citizens to visit domestic tourist destinations. “I know people travel abroad for holidays but can we think of visiting at least 15 tourist destinations across India before 2022, when we mark 75 years of freedom?” he asked.

Recognising the importance of entrepreneurship, he said, “Wealth creation is a great national service. Let us never see wealth creators with suspicion. Only when wealth is created, wealth will be distributed. Wealth creation is absolutely essential. Those who create wealth are India’s wealth and we respect them.”

But as the Indian economy expands, so do the aspirations of its people, Modi said.

If, for instance, a decision was taken to set up a railway station, people have begun to ask when the Vande Bharat Express would come to their area. People want not only a good railway station or a bus terminus, but a good airport as well.

“If we install an electricity tower, they ask when will we have 24-hour power?” the PM said.

Ranen Banerjee, leader-Public Finance and Economics, PwC India, said: “Given the headwinds the economy is facing, including slowdown in Eurozone and concerns in US, there is an urgent need to pump prime the economy. The private sector investments will not pick up till there is a sentiment reversal. The starter of the economic engine has to be an infra push by the government. We can expect some slippages in fiscal deficits but if it is for the infra push, it will be worth it. It would be more difficult to kick-start the economic engine if the sentiment turns very negative. We need to act decisively now.”