Will India become a $5 trillion economy by 2024? The Economic Survey suggests that it would require annual gross domestic product (GDP) growth rate of 8%. GDP growth over the last few years has been lower and falling. We need significant booster rockets to fire India’s economic growth to a higher trajectory. Sadly, neither the Economic Survey’s prescriptions nor the Budget’s announcements will propel us to the goal.

Consider the standard macroeconomics textbook calculation of GDP: Consumption + private investment + government expenditure + exports – imports. What are the prospects for favourable movements across these heads over the next 5 years?

Consumption is experiencing a slowdown. This is reflected in lower goods and services tax (GST) collections and indicators such as a decline in car sales. Real estate is experiencing a slump. That means construction, a sector with a significant multiplier impact on economic growth, is not generating the income that would spur consumption. The budget announced ambitious targets for construction of affordable housing. Given the government’s inability to meet its targets, we cannot expect this sector to drive breakthrough growth.

More than half our people live in rural India. Their incomes have stagnated over the last few years. Thus rural consumption is not the driver of the economy it once was. There is acute rural distress as the farm economy copes with lower prices, backbreaking loan burdens, the absence of a safety net and the vagaries of climate and water availability. The finance minister proposed to promote the adoption of “zero-budget farming" as a solution. Neither that, nor the PM-Kisan’s 6,000 per farming family, will help rural Indians earn and consume in an impactful manner.

The Economic Survey issues a clarion call for private investment. However, private sector investment has been falling, animal spirits are absent and banks are reluctant to lend. The NBFC crisis has worsened the credit crunch. Foreign direct investment is also slowing, in spite of India’s growth rate being higher than other major economies.

The MSME sector continues to suffer from the impact of demonetisation and hasty implementation of GST. The Budget’s proposals for MSMEs will not kick start their accelerated growth. Thus job creation will remain slow and unemployment will likely remain around its 45-year high. Fewer jobs, means lower consumption, which int turn, means lower growth.

Government investments can have a remarkable impact on growth. However, the budget only announced the formation of a committee to look into how to raise and invest the 100 trillion in infrastructure that the Bharatiya Janata Party (BJP) promised in its manifesto. From where will the government get the money?

One announced option was to raise funds from brownfield projects. That means that old roads will possibly become tolled roads. This government’s track record on disinvestment is not remarkable. Instead of raising resources through privatization, it gets LIC or ONGC to buy up other PSUs.

The budget proposes PPP as the saviour for investments needed in Railways and other key sectors. But PPP is hardly drawing the kind of interest it once did, and many leading infrastructure sector players are flirting with bankruptcy. Thus, government expenditure is unlikely to provide the booster that the economy requires.

Exports have fallen and are at a 14-year low as a percentage of GDP. They are unlikely to improve, considering the global conditions. The Trump-triggered tariff wars limit the possibilities of substantial gains from export markets. India has fallen behind in markets where we once had a comparative advantage, e.g., textiles, where Bangladesh is performing way better. Our services exports have been remarkable historically, but our IT firms do not seem ahead of the curve when it comes to artificial intelligence (AI) and other frontier technologies. We are already losing our low labour cost, lower-end services advantage to countries like the Philippines and to machine learning technology. Export-focused Make in India is a mirage, unless the US-China trade war results in the Americans sourcing more from India.

On the import front, we remain stuck with our dependence on petroleum products. Low oil prices have been a boon over the last half decade. But US-Iran tensions can disrupt the peace. India is also importing electronic components at an inexorable pace and is unlikely to shift to local manufacturing anytime soon. Our appetite for gold is unlikely to be affected by the enhanced tax announced in the Budget.

Thus, the current state of play with the factors that drive GDP growth is very pessimistic. Will something dramatic arise over the next few years to help us leapfrog? Unlikely. One possibility is, if our young workforce were to become the workforce of the world. The Budget announced that it would launch programmes to skill youth for foreign employment. So, it’s back to brain drain and remittances. But, given that the government is unskilled at skilling it is hard to get hopes up.

So, sure, we’ll get to $5 trillion. Just not under Modi 2.0.

Rajeev Gowda is a Rajya Sabha member and a senior leader of the Congress who also heads the party’s research department.

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