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India to become USD 5 trn economy by 2020: D&B

Source: IRIS (27-JUL-12)

The Indian economy crossed the USD 1 trillion GDP mark in FY08 consequent to the high growth witnessed since the second half of the last decade. The big push that India received during 1990`s through the initiation of wide-ranging structural reforms had catapulted the economy to a high growth path. 

Though it had taken some time for the reform to bring about the required structural changes, it eventually expanded the opportunities for economic activity immensely which resulted in more rapid growth. The set of industrial, trade and financial sector reforms and the consolidation of government finances which encouraged private investment activity had played a major role in  driving the growth. The growth rate of the Indian economy accelerated sharply to over 8.0% in FY04 and witnessed an average annual growth of around 9.5% during the period FY06 -FY08. The high growth recorded during this period had raised the aspirations of achieving a double digit growth rate.

The growth trajectory of the Indian economy suffered a setback when the economy slowed down due to the impact of the global financial crisis. The crisis revealed that the emerging market economies (EMEs) were not completely decoupled from the advanced economies. The crisis in fact brought to fore the extent of inter linkages of the EMEs with the developed economies through trade, finance and confidence channels.

Dr. Arun Singh, Senior Economist, Dun & Bradstreet India said, ``The subdued growth in the domestic economy owing to the culmination of domestic and global factors is likely to continue till FY15, after which we expect the Indian economy to embark on a high growth phase. By FY20 we expect India to become a USD 5.5 trillion economy driven by increased infrastructure spending, substantial growth in investment activity, strong growth in services sector, emerging of a large working age population and robust consumption demand. However, the future performance of the Indian economy will heavily depend on reinforcing domestic drivers of growth and stability in the global economic environment. The major impetus to incremental growth will come from the BIMAROU states which are expected to contribute significantly to India`s growth story during the current decade. Further, India`s success story is set to enter a new era of inclusive growth during the current decade.``

``While India has moved into the one trillion dollar economy league, the downside risks and therefore the challenges to growth have increased significantly over the last one year. As the economy progresses ahead, there are reasons to believe that these challenges will be met with some assurance of success. We believe that emphasis on boosting the investment activity and setting up of a favorable policy environment would provide the ``big push`` to the Indian economy. Moreover, convergence of policies at the centre and state government levels and concentrated efforts by the governments would be a prerequisite to achieve this vision,`` he further added.