Baig, who believes 2030 would be a more practical target than 2025 for achieving the $5 trillion target, said what is needed is for more people to migrate from the agricultural sector to the industrial sector, or for the government to make urban areas so well-endowed with infrastructure that the need for migration reduces.
“So $5 trillion seems like a pretty impressive number… for the average Indian it will not be impressive at all,” Baig said at the Motilal Oswal Global Partner Summit.
“Goals, ambition has to be far bigger than that. And again, the setback of Covid-19 notwithstanding, to me the scale of India is so big and the demand of the public is so much and the starting point is so low, that 5 trillion (dollars) is not an impressive target whatsoever,” he said.
He said if the country were to achieve the $5 trillion target by 2030, it would require dollar GDP to grow by around 7%, the rupee to be stable, a nominal expansion of around 7%, real growth of 4% and inflation at around 3%.
Explaining why the government’s target is insufficient, Baig said that at present the average India’s working capita GDP is around $2,100 and even assuming a 7% growth in the next 10 years and a population growth from 1.3 billion at present to 1.4 billion by 2030, the country would end the decade with a per capita GDP of around $3,800. “Which is lower than what Indonesia is today,” Baig said.
“The history of development is pretty straightforward… what you need is for people to migrate from the agriculture sector to the industrial sector, from the rural to the urban area, or you make the urban area so well-endowed in infrastructure, in human capital, that migration is not necessary but people can still have high productivity and push up the value added to the economy on a sustained basis,” he said.
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