Opinion | Steer clear of policy shocks to achieve economic goals4 min read . Updated: 20 Feb 2020, 10:47 PM IST
Big and abrupt policy changes must be avoided since these can weaken India’s growth trajectory. As for tax evasion and greater formalization, a set of inclusive policies can help achieve these
Will the Indian economy reach the $5 trillion mark by 2022 in line with the popular discourse, or is it just a mirage? Given that at present India is a $2.7 trillion economy (in 2010 constant US dollar terms), achieving that size would amount to almost doubling the current real gross domestic product (GDP). Even if the economy grows at 14-15% per year in real terms, it would require 4-5 years to achieve that size. Achieving such growth, however, would be a Herculean task, and the recession-like conditions only make it harder. The annual growth rate of real GDP at present is about 5%, amid a slowdown in consumption as well as investment, and an increase in unemployment. If this rate persists, it would take even longer—about 14 years—for the economy to reach the $5 trillion mark. How should policymakers respond to this unpleasant arithmetic?