Despite shining as a bright spot in a gloomy global economy, India’s financial landscape is blemished by poverty and inequality, as it has a long way to go before matching up to developed countries. The country has set a target of becoming a $5 trillion economy, while the IMF has said that its growth will further slowdown to 6.1 per cent in FY24, from 6.8 per cent in FY23. As India fades global headwinds, former Reserve Bank of India Governor C Rangarajan has said that India needs 9 per cent growth for 20 years to become a developed country.
Is $5 trillion enough?
Speaking at the convocation for the ICFAI Foundation, Rangarajan added that India will be considered a middle-income country based on per capita income, even if it becomes a $5 trillion economy. For India to be at par with developed countries, the per capita income will have to be $13,205, which is a lot higher than $3,472 to be achieved with the $5 trillion target. He also mentioned how India’s rank in terms of per capita income is still 142 among 197 countries, even though it has become the world’s fifth largest economy.
Need to pick up pace
Rangarajan urged India to run fast and with a clear plan for growth after the pandemic and the war in Europe. He expressed confidence in India’s ability to raise the growth rate to 7 per cent before hitting a 9 per cent rate that he has recommended. Rangarajan had served as the RBI Governor during an important period in the early 90s, right after India’s economic liberalisation that triggered a new era of growth.
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