india

Updated: Jul 06, 2019 22:58 IST

A feisty Prime Minister Narendra Modi expressed confidence on Saturday that his National Democratic Alliance (NDA) government would achieve its goal of turning India into a $5 trillion economy during its second term, describing as “professional pessimists” sceptics who doubt that the target will be met.

Modi, who was in Varanasi to launch the nationwide membership drive of the Bharatiya Janata Party (BJP), said the budget unveiled on Friday by finance minister Nirmala Sitharaman had set the direction towards the ambitious goal, which some economists and politicians say is not realistic.

“With support and participation of the people, my government will achieve the goal of making India a $5 trillion economy as the ‘size of cake’ matters,” Modi told BJP workers at the Deendayal Upadhyay Trade Facilitation Centre. “The bigger the cake, the greater the share everyone will get. This wealth will not only transform the earnings of each family but also their lives.”

NR Bhanumurthy, an economist at the National Institute of Public Finance and Policy, explained on Friday that the theory “the bigger the cake, the better” was propounded by neo-classical economics, which deals with how economies grow and the role investment plays in it. To achieve a GDP target of $5 trillion, India’s inflation-adjusted growth rate must be 8%, he said.

Modi had on June 15 laid down the $5 trillion goal to be achieved by 2024, saying it was “challenging but achievable”. The goal was reiterated by the Economic Survey released on July 4 and Sitharaman’s first budget.

Modi, who led the NDA to a landslide win in the April-May general election, said sceptics who thought the goal was unrealistic were “professional pessimists” who were experts in turning solutions into problems.

Some experts say that reaching the goal by 2024 is a difficult target. “The $5 trillion target by 2024 is a dangerous distraction,” columnist Vivek Dehejia and economic researcher and writer Rupa Subramanya wrote in an opinion piece for business daily Mint, a sister publication of Hindustan Times.

The Economic Survey said to become a $5-trillion economy, India needs to sustain a real GDP growth rate of 8%. It added that international experience suggests that such growth can only be sustained by a “virtuous cycle” of savings, investment and exports catalysed and supported by a favourable demographic phase.

In his hour-long speech, Modi said India’s expansion into a $5-trillion economy will transform lives by increasing the purchasing power of every individual. This will cause demand to increase, which in turn will boost the manufacturing sector and generate more employment opportunities, he said.

“I am not an economist, but I am committed to achieving the goal and India is heading in the right direction,” Modi said.

The PM cited the example of some countries that had once been poor but acted to boost the per capita incomes of their citizens and had risen up ranks to reach the status of advanced economies today.

He recited a few Hindi couplets to suggest that his government’s resolve was stronger than the difficulties it faced in transforming India into a $5 trillion economy by 2024, from $2.7 trillion now and an estimated $3 trillion at the end 2019-20.

The dream of “New India” was intricately linked to the ambition, Modi said. “This aim will fill all of us with new commitment, new energy and new vision,” he said.

The PM said India needed to come out of the psychological trap of celebrating poverty, which was linked to the cycle of low incomes and low expenditure that was holding the economy back.

He asked BJP members to go door-to-door to explain what his government’s dream of turning India into a $5 trillion economy actually means for the people.

“No grand ambition can be fulfilled without the people’s participation,” the PM said, citing the Swacch Bharat Mission and other government programmes whose success he largely attributed to the people embracing them.

In a veiled attack on previous, non-BJP governments, Modi said that while it took them 60 years to make India a $1 trillion economy, his government had more than doubled the size of economy in the last five years.

Congress MP Shashi Tharoor told PTI on Saturday THAT the budget reflects “incrementalism sans vision” and the government’s aspiration to push the economy to the $5 trillion-mark does not have any road map.