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An eight per cent growth rate of gross domestic product (GDP) is achievable for the Indian economy according to the Economic Advisory Council to the Prime Minister (EAC-PM). The comment comes after the Economic Survey 2019 estimated that India will have to grow at an average of 8 per cent per annum till 2025 to achieve the goal of becoming a $5 trillion economy.
Also read:The highlights of Economic Survey 2018-19
The Chairman of the Economic Advisory Council to the Prime Minister (EAC-PM), Bibek Debroy said that the Economic Survey’s emphasis is on fiscal consolidation and fiscal discipline and investments, especially private investments, as the growth driver. “In the last five years, India’s average rate of real GDP growth has been 7.5 per cent and Survey’s projections are that, to become a $ 5 trillion economy by 2024-25, with an annual rate of inflation of 4 per cent, real GDP growth will have to be 8 per cent. This is doable.”
“But one should not deviate from the path of fiscal consolidation that was set out in the Medium Term Fiscal Policy Statement, articulated both in terms of the fiscal deficit/GDP ratio and the debt/GDP ratio,” Debroy said. “High deficits crowd out private investments, raise costs of private capital and pre-empt household sector financial savings. Though India is projected to grow at 6.8 per cent in 2018-19, there is little room for counter-cyclical public expenditure,” he added.
Also commenting on the survey, Vice Chairman of NITI Aayog, Rajiv Kumar said, “The Economic Survey 2019 reflects the government’s resolve to maintain fiscal stability while pushing up GDP growth rates by measures to accelerate private investment. It provides a comprehensive and clear picture of economic trends & challenges ahead.”
Both the NITI Aayog and the Economic Advisory Council to the Prime Minister have said that the Economic Survey 2019 reflects the centre’s resolve to maintain fiscal prudence.
Debroy also said that the Survey has laid out a blue-print for growth and jobs in the next five years. This draws on initiatives the first Narendra Modi government initiated between 2014 and 2019, including initiatives to change behaviour. “There is a continuity between the policies from 2014 and 2019 and the expected policies from 2019 to 2024 and Survey has rightly flagged fiscal devolution and federalism, expenditure reform, policies for MSMEs, GST and reform of direct taxes,” a statement from the PM-EAC said.
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