THE $5 TRILLION-

ECONOMY GOAL A
CHALLENGE FOR
INDIA
BY PROF. ANIL KAMBOJ
INSPECTOR GENERAL RETD
 POLICY INITIATIVES
 Several policy initiatives are required in the next six years to maintain the eight-percent growth
rate and reach the $5 trillion target:
 1. Stable society: By 2021, every Indian will have a roof over their head, food on the table, a
gas connection, and so on - need will disappear, and everyone can aspire to improve quality
of life. Economic growth cannot occur in a sea of poverty
 2. Improve productive sectors: Data shows 42.7 percent of India's workforce in 2016-17 was
engaged in the agriculture sector, crawling at a 3.4 percent growth rate and contributing
only 17.3 percent to the GDP.
 Meanwhile, 57.3 percent of the workforce was engaged in industry and services growing at
5.5 percent and 7.6 percent, respectively. This is resulting in high income inequity. By 2030,
India must move a majority of agriculture-dependents to industry or services. About 10
percent of the workforce engaged in agriculture is sufficient - the US and China have both
done this, while successfully producing food surpluses in the agriculture sector. Expanding
them with skilled labour
 POLICY INITIATIVES
 3.Urbanise with labour-intensive industry (LII) clusters: Urbanisation aggregates human
activity and boosts productivity and specialisation. by developing 5,000 small towns all over
India. By creating labour-intensive industry (LII) clusters in and around these towns. Network
of 5,000 small towns will become India's growth engine.
 4. Infrastructure development and supply chain: India's construction sectors need a
significant boost – roads, railways, ports, tourism infrastructure, power surplus infrastructure,
and more.
 The speed of carriage of goods on railways needs to increase from the current 25kmph to
50-60kmph
 Will also provide mass employment and a logistical backbone to boost India's industrial and
export capabilities and supply chain efficiency.
 POLICY INITIATIVES
 5. Jobs and skilling: India needs 15 million jobs a year, but only 11 million-12 million are
counted.
 Incentivising specialisation through higher education and research will build a workforce
pipeline for hi-tech and other high value-add industries.
 6. Tax and justice: Tax terror has hurt India badly, and litigation has doubled in the last five
years. Tax justice system needs reforms to reduce unnecessary litigation and stop tax terror
 7. Judicial reforms: It is imperative to improve our judicial infrastructure and police
investigative capacity - so justice can be served to the aam aadmi.
 8. Digital economy: India is rapidly moving from a data-poor to data-rich country
 Most Indians now have digital identities. With one million+ mobile phones, 560 million+ internet
connections, and 350 million+ additional bank accounts opened since 2014.
 New payment modes, ecommerce, and start-up entrepreneurship.
 POLICY INITIATIVES
 9. Banking: India has been phenomenal in the banking sector, which can be a strong
growth driver
 10. Empower big cities: India’s big cities are engines of growth – Mumbai is a financial hub,
Delhi is the seat of political and growing technological power, Bengaluru is a global
technological hub – but are starved of resources. Take Bengaluru, for example. Every major
Indian city has potential to become a global hub in various domains.
 11.Higher education: A nation's true worth is in its higher education system
 12. Good governance: Prime Minister Modi has set the tone by ensuring there's no corruption
 13.Role of States: We are now in an era where the role of the Center is increasingly limited,
and State spending is growing. Just like Maharashtra Chief Minister Fadnavis has put forth a
farsighted vision of a $1 trillion economy by 2025
 To reap this vision of reaching $5 Trillion, we must first take stock. In FY 2018-19, India's GDP is
estimated to be Rs 190 lakh crores or $2.7 trillion (at Rs 70 = $1). Say we grow at eight percent
for the next six years, with inflation at 3.5 percent, yielding a nominal growth rate of 11.5
percent - in constant currency of Rs 70 = $1, starting at $2.7 trillion - the $5 trillion goal is well
within reach.
 India is a colossus with profound civilizational heritage and tremendous potential for global
impact.
 How India can become a $5 trillion economy
 What growth rates will take us to 5T and how soon? World Bank says India’s GDP is expected
to grow at 7.3 per cent in 2018-19. The RBI’s figure is 7.4 per cent. So we can take 7.4 per cent
as the base figure.
 A simple calculation shows that the GDP at current prices will reach 5T in 2027 at this growth
rate. So if we sustain the base growth rate of 7.4 per cent, we will become a 5T economy
within ten years.
 However, an ambitious agenda of change can push growth rates upwards. So, India can
become a 5T economy in 2024 with 10 per cent annual growth rate. And 14.2 per cent
growth will get us there in 2022. But achieving such high growth will require exceptional
structural changes in all sectors of the economy.
 How India can become a $5 trillion economy
 To reach 5T, we need to shift our perspective from policy to projects. Select sectoral
initiatives can be converted into 100 projects. Each to be led by a competent leader with
proven skills. They must report to the PM. The regular bureaucracy would facilitate the job of
the project leader, who will be free to choose her team. We propose few such initiatives.

 Model farms
 One, transform agriculture by setting up a thousand world-class farms across the country.
Most farmers do not have the capacity or means to benefit from the existing schemes. Time
to try a new model where farmers learn to be productive by working in association with a
professional firm which takes care of farming, marketing, and exports.
 How India can become a $5 trillion economy
 Manufacturing ecosystem
 Two, transform manufacturing. With a trade war-like situation emerging between the US and
China, and MNCs looking for alternative manufacturing locations, there is no better time for
India to give a big push to manufacturing. To get there, India has to focus on setting
manufacturing ecosystem for the four product groups.
 One, machinery that makes the products. Two, specialty materials, biologics,
nanotechnology, integrated circuits, embedded systems, medical imaging devices. Three,
computers, TVs, mobile phones, and telecom equipment. And, four, auto components, toys,
furniture, footwear, and apparels. This skill and labour-intensive products group can absorb
part of surplus people from the agriculture or informal sector.
 Over 70 per cent of India’s exports come from the manufacturing sector. New manufacturing
operations will allow India to become part of few global value chains and help in raising
exports to a trillion dollar mark.
How India can become a $5 trillion economy
 Transform services
 Services contribute to 56.5 per cent of GDP but create only 30 per cent of jobs. So far, IT
sector has been the star, exporting over 80 per cent of its $150 billion turnover.
 But as over 50 per cent of IT revenues come from the US, the future looks challenging with
Trump at the helm.
 Also, as over 40 per cent of the IT jobs India does will disappear due to automation, the sector
needs to develop expertise in IOT, AI, and their applications. Travel and tourism, health, and
professional services can be the other star service sectors. Better delivery of infrastructure,
education and essential services would also create a large number of jobs and growth.
 How India can become a $5 trillion economy
 The travel and tourism sector created 40 million jobs and contributed a significant 10 per cent
to GDP. Considering the variety of experiences India offers, the sector can grow manifold with
project-driven investments in budget hotels, medical tourism, tourist safety, and top 100
attractions.
 India as a global healthcare jobs provider can be another big story. Global healthcare and
wellness is a $8 trillion industry, which would require over 100 million health workers in the next
15 years. Dr Devi Shetty proposes that we should convert India’s 600 district hospitals as
medical nursing and paramedical schools to train 5 million doctors, nurses, and paramedics
to meet the global requirement. They can remit about $100 billion of foreign currency every
year.
 How India can become a $5 trillion economy
 The construction sector’s potential is largely untapped. It has slowed in the past two years but
remains big with over 8 per cent share in GDP.
 It is the largest job-generating sector after Agriculture. The sector lacks transparency, and
millions of buyers stand cheated in the hands of builders every year.