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Noting that the achievement of USD 5 trillion economy is a short term “aspirational goal,” former RBI Governor C Rangarajan on Saturday said even after that India will still be known as middle income country with per capita income USD 3472.
Rangarajan further said in order to reach the level of an upper middle-income country, it will take another two years and to be classified as a developed country, the per capita income will have to be at a minimum of USD 13,205 and that will take more than two decades of strong growth of between 8 to 9 per cent to achieve it.
Speaking at the 12th Convocation of ICFAI Foundation for Higher education here, he said at aggregate output level, India is the fifth largest economy in the world now. That by itself is an impressive achievement. But in terms of per capita income, India’s rank according to IMF is 142 out of 197 countries.
“The immediate focus of policymakers must be to raise the growth rate of the economy. Achievement of a USD 5 trillion economy is a good short term aspirational goal.
This will take a minimum five years of sustained growth of 9 per cent. Even then, at the end of it, India’s per capita income will be only USD 3472 and we will still be classified as a lower middle income country,” he noted.
“We have thus to go a long way. This only shows we must certainly need to run fast,” the former chairman, Economic Advisory Council to the Prime Minister said.
Post Covid-19 and post the Russia–Ukraine war, there is a need to lay down a clear roadmap for India’s future development.
Initially, there is need to raise the growth rate to seven per cent and then follow it up with a growth rate of eight to nine per cent which is possible and India has showed in the past it can have that kind of growth rate over a sustained period of six to seven years, he said.
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