Not 2025, India will take another 3-4 years to touch $5 trillion GDP: Raghuram Rajan

Bengaluru: When asked about India’s $5 trillion economy goals, former RBI Governor Dr Raghuram Rajan, dismissed the timeline of 2025 brandished by the Indian government, to say “It is 3-4 years, probably 4 years (away).” 

On the sidelines of an event at the Bangalore International Centre on Friday, DH asked him when India might reach the $5 trillion gross domestic product aspiration if not in 2025, as he has earlier reiterated based on the pace at which the Indian economy is moving.

Remarkably, this comes on the same day another economist, Arvind Panagariya, who’d been a part of the Indian administration not so long ago, serving as the Vice Chairman of Niti Aayog until 2017, too pegged the timeline for reaching $5 trillion at 2026. His observation was made while delivering the 18th C D Deshmukh Memorial Lecture in Mumbai.

Dwelling on the book, “Breaking the Mould” that he’s co-authored with fellow academician, Rohit Lamba (Assistant Professor at Pennsylvania State University), Rajan repeatedly emphasised that strengthening human capital is the key to making India richer, before it gets older by 2047.

“The cup is half full,” Rajan believes. While India recently surpassed the United Kingdom to become the fifth-largest economy, millions in India continue to remain unemployed, he pointed out.

Even as India has fired on all cylinders to cash in on the ‘China Plus One’ strategy where global companies are diversifying their operations away from China, intellectual prowess in conjunction with skilled labour is the way forward. “Where is India’s Apple?,” he questioned.

“Apple is worth $3 trillion on a good day. Foxconn is worth $50 billion on a good day. Apple is worth 60 times Foxconn. In other words, what is the part of the supply chain worth capturing, is the plateaus, not the valley,” he explained. 

Elaborating on the impact of a difficult macroeconomic global scenario on the innovation economy, in the form of a funding crunch, Rajan said: “The easy money is gone but I think the sensible money will continue…even the easy money may come back, markets are getting euphoric once again”.