Published: 10th Dec, 2021
India is aiming to be a $5 trillion economy by 2024-25. Annual growth rate of 9 percent is needed for the next five years to be a $5 trillion economy. By achieving this feat, India will become the 3rd largest economy. USA with a rank 1 is a $20 trillion economy and China with a rank 2 is around $12.5 trillion economy.
Challenges in Becoming $5 trillion economy:
Primary Sector
- One of the major problems that this sector faces is under-employment and disguised employment.
- The slow-down in agricultural growth has become a major cause for concern.
Manufacturing Sector
- Poor networks of roads, inadequate air & seaport capacities along with undeveloped railway networks are hindering the growth of this sector. This leads to slow & inefficient delivery of the product to the customers.
- The transportation industry is also severely unorganised. The employees of this sector have inadequate skills which lead to inefficient supply of goods. Low level of technology and poor maintenance of the tools are also responsible for inefficiency of the transportation industry.
Service Sector
- The main problem with this sector is that the jobs which involve lower salaries do not attract much employment. And this remains the future dilemma as India is looking for double-digit growth in the near future.
COMMON CHALLENGES
- Depressing pace in carrying out land and labour reforms: This has been a major turn-off for investors looking at setting shop in the country. Budget talks about narrowing labour laws. This is a step in the right direction but quick execution is important.
- Funding Problem: India does not have powerful institutions that can fund long-gestation infrastructure projects. Banks do not have enough long-term liabilities to match such loans. Lenders have gone terribly wrong in the past by not following healthy lending practices.
Suggestive Measures:
- There is a need to place India’s official statistics on a firmer footing, so that we can be sure that economic policy-making is based on reality. However, getting the numbers right will not ideally end the task.
- Government alone would not be able to meet the target of achieving the $ 5 trillion economy. Private sector would have to take the lead. Budget 2018-19 included a hike in the disinvestment target, governmental support to NBFCs and a long-term plan to deepen the corporate bond markets.
- Structural reforms in the agriculture sector would also have to be carried out. There is a need to modernise the farm sector.
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Q. Given the Covid-19 pandemic, how realistic is the achievement of a 5 trillion economy for India by the year 2025?. Explain the significance of India becoming $5 trillion Economy(150 Words) 10 Marks. |
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