India aims to achieve a $5 trillion economy by FY2026. Despite being the fifth largest economy internationally, the pandemic has caused a delay in achieving the target originally intended for FY2024. The article discusses India’s current economic status, the government’s initiatives, the measures required to achieve the target, and the impact of global developments on the Indian economy.

Current Economic Status of India: 

• India’s economy is recovering from the pandemic and growing at a steady pace but with reduced GDP growth projections for FY23.
• Lack of infrastructure and job creation are major challenges despite government efforts.
• Income inequality remains a significant issue, with the richest 1% holding 73% of the country’s wealth.
• Corruption continues to hinder economic growth and development, despite government efforts.
• Addressing these challenges is crucial for India to achieve its target of a USD 5 trillion economy.

Steps Taken by the Government:

• Established a high-level working group in 2019 to achieve the target of a $5 trillion economy by 2026.
• Recommendations include increasing productivity, promoting innovation, and implementing structural reforms in various sectors.
• Implemented infrastructure development projects, simplified regulatory environment, and launched initiatives such as Make in India, Digital India and Startup India.
• Implemented structural reforms such as the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code (IBC) to revive the economy.
• Liberalized foreign direct investment (FDI) rules in various sectors to attract foreign investment.

Can India Reach the Target? 

• The target of a $5 trillion economy by 2026 is believed to be achievable by many economists.
• Reports suggest India needs to maintain a high growth rate of 6-7% over the next few years to achieve the target.
• Key steps required include structural reforms, investment in infrastructure, and promoting entrepreneurship and innovation
• Factors such as a diversified economy, strong offshore opportunities, young population, and focus on renewable energy could work in India’s favor to achieve the target.

Impact of International Developments: 

• International developments such as the Ukraine-Russia conflict, China’s post-COVID opening, and US interest rate hikes could impact the Indian economy, especially the value of the rupee.
• A weaker rupee could lead to increased import costs and inflation, which may hinder India’s efforts to achieve the USD 5 trillion economy target.
• To mitigate these risks, the Indian government is diversifying trade relationships and increasing exports.

Conclusion

India’s goal of a $5 trillion economy by 2026 is achievable with sustained efforts in structural reforms, infrastructure investment, and entrepreneurship. Monitoring and managing the impact of global developments on the Indian economy, especially the rupee’s value, is
crucial.