Are There Any Roadblocks To India's $5 Trillion Economy Dreams?

Published on
May 27, 2023
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    Can India Achieve Its $5 Trillion Economy Goal?


    In 2019, the government set an ambitious dream of making India a $5 trillion economy by 2024-25. This target seemed like an unprecedented dream of highly optimistic leadership then.

    However, cut to 2023, India has already added half a trillion dollars in its making. The Indian economy rose from $2.84 trillion in 2019 to $3.5 trillion in 2023. That is already 5.8% YoY growth for India. 

    Despite the global pandemic and almost world war, India’s economy has grown steadily in recent years. But, there are still some roadblocks that need to be addressed to achieve this target. 

    Roadblocks Ahead Of India’s $5 Trillion Dream

    Recently, the International Monetary Fund (IMF) has decreased its GDP projection for India from 7.4% to 6.8%. Also, OECD and the World Bank have decreased their optimistic projection due to the spillover effect of the slowdown in the global economy.  

    • Effects Of Global Pandemic:  The pandemic was a major roadblock to global growth. During FY20-21, India’s GDP growth was -6.6% causing a major hindrance to the country’s dream. Even after the world has emerged from the global pandemic, it still faces its ripple effects. The global supply chain bottlenecks have not been completely erased. The increase in foreign remittance during the pandemic has caused a ripple rise in inflation. This led to an inflation rate of 6.6% in 2020, compared to 3.73% in 2019.
    • Slow Growth In Agriculture: Agricultural sector is a crucial part of India’s economy. Around 50% of India’s population relies on agricultural practices as a source of livelihood. In contrast, the agricultural sector contributed only 20.2% of the country’s GDP in 2022. In fact, after 17  years, the GDP contribution for agriculture has touched 20%. Even after several years of the green revolution, India’s growth in the agricultural sector is still inconsistent.
    • Foreign Geo-Political Issues: In the past three years, the geo-political scenario of the world has been very dynamic. It has faced various problems, such as:
      • An aggressive increase in interest rates by Federal Reserve
      • Energy Crisis in Europe
      • Russia-Ukraine war
      • China’s zero covid Policy
      • UK’s economic recession

    These factors have caused intangible ripple effects in global trade, leading to a slowdown in India’s growth story.

    These roadblocks might not directly impact India's current economic goals. However, overcoming these roadblocks can easily help India achieve the $5 trillion dream.

    Factors Contributing To India’s Growth


    As McKinsey CEO Bob Sternfels said, “It is not India’s decade, it's the century of India.” 

    India's goal of becoming a USD 5 trillion economy is certainly achievable, although it may face challenges along the way. Due to roadblocks faced along the way, India may skip the target by a year or two. 

    But with the right policies and initiatives, India can overcome these challenges and reach new heights in the global economy. The future looks promising for India's economy, and it will be exciting to see how it evolves in the years to come. 

    You can also be a participant in India’s growth journey actively. Invest in the country’s fastest-growing startups. To explore lucrative investment opportunities, sign up with Grip today!

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