India on Thursday predicted that its economy will rebound and grow at 7.0 percent this year as it outlined plans on how to double its economy by 2025 to $5 trillion. The forecasts are part of an annual Economic Survey released before the full budget on Friday and sheds light on the state of the Asian giant's economic health.
India remained the world's fastest-growing major economy for nearly two years, outpacing China after the right-wing government of Prime Minister Narendra Modi took power in 2014. But a fall in domestic demand lowered its growth rate in the last quarter to 5.8 percent, pushing it to a five-year low and behind China's 6.4 percent in the same period. The slowdown was largely linked to a slump in domestic consumption that has impacted tax collection amid rising state expenditure on the distressed farm sector. The annual growth in the last fiscal year remained at 6.8 percent, down from 7.2 percent in 2017-18.
The report says India's economy will expand through investment and consumption along with a stable political government. Modi, who won a second landslide victory in recent national elections, is likely to push up government spending and accelerate economic growth through tax reliefs. The survey said India needs to sustain a growth rate of more than 8.0 percent to become a $5 trillion economy by 2025, up from $2.61 trillion now. India is ranked the sixth-biggest economy just behind Britain and ahead of France. The US and China occupy the first and second spots with $19 trillion and $12 trillion.
India's chief economic advisor K.V. Subramanian said the survey lays out a strategic blueprint for achieving the goal, through "virtuous cycle" of savings, investment and exports. "The key theme is about shifting gears, we have grown well but we need to shift gears at 8 percent sustained growth," Subramanian told reporters at a press conference in New Delhi. Modi, who in the election campaign came under sharp attack for falling short on creating jobs, tweeted that the report "outlines a vision to achieve a $5 trillion economy".
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