Economists of a certain persuasion declare that the Covid pandemic has ruined India’s chances of achieving a $5 trillion economy in the near future.
They’re wrong. Let’s do the math.
According to the 2021-22 Union Budget, nominal GDP on 31 March 2021 is projected at Rs. 195 lakh crore.
The Budget projects a 14.4 per cent growth in nominal GDP (real + inflation) in 2021-22. According to the Budget document, this will result in a GDP of Rs. 223 lakh crore on 31 March 2022.
So far so good. Now assume an average real GDP growth of 7 per cent per year in the six-year period between 1 April 2022 and 31 March 2028. Add average inflation of 5 per cent a year.
These assumptions are based on the large capital expenditure in the Budget that will drive growth. Borrowings will keep inflation at around 5 per cent.
Thus average nominal GDP growth between 2022 and 2028 will, on a conservative estimate, average 12 per cent a year. Hence the projected GDP of Rs. 223 lakh crore on 31 March 2022 will double in six years to Rs. 450 lakh crore on a compounded annual growth basis.
Read More at https://swarajyamag.com/economy/indias-post-pandemic-pathway-to-a-5-trillion-economy
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